Regulations to drive transparency in financial advicee-By Elizabeth O'Brien

New wrinkle coming to the old question of whether workers should keep their savings in their company 401(k)

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Regulations expected to take effect this year will add a new wrinkle to the old question of whether workers should keep their savings in their company 401(k) when they switch jobs or retire.

The U.S. Department of Labor’s so-called fiduciary proposal will require brokers to act in the best interest of retirement savers who are considering rolling 401(k) assets into an individual retirement account. Currently, brokers are held to a lesser standard that requires them to sell investments that are merely suitable for their client. “This is a historic, pro-consumer event,” said Mitch Tuchman, managing director of Rebalance IRA, a firm that manages retirement investments, and a MarketWatch RetireMentor columnist.
The Office of Management and Budget is currently reviewing the proposals, which, pending a stamp of approval by that office, are expected to be published in their final form in the coming weeks. Generally, the regulations will then take effect eight months after publication, according to a Department of Labor filing in the Federal Register.
When they do, Tuchman said, investors who seek a broker’s recommendations on what to do with old 401(k) assets will be less vulnerable to poor-quality, conflicted advice. The fact that many investors have been ill served at this critical juncture could be seen as a reason to leave the 401(k) assets where they were.
Soon, Tuchman said, the sales of retirement products will become more like the sale of cars. A couple of decades ago, consumers had little way of knowing if they were being treated fairly at the auto dealership. These days, increased price transparency has boosted consumers’ bargaining power.
Meanwhile, prices for many investment products remain murky. When an investor seeks advice from a broker on what to do with 401(k) assets from a prior job, the broker may offer the investor an individual retirement account, annuity or another product. Since no money changes hands directly, the transaction may not feel like a sale, and the investor may not have had his guard up.
Although his business card might say “adviser,” a broker is also a salesman who is compensated by the financial services firm supplying the mutual funds or insurance products. Registered investment advisers, by contrast, are already held to a higher, fiduciary standard. Investors often have a hard time distinguishing between different kinds of investment professionals, which is another reason to hold them to similar standards of professional conduct, proponents of the Department of Labor regulations say.
Under the current standards, a broker is allowed to steer clients to an investment that pays him a fatter commission, even though it charges the clients higher operational expenses than other options.
These expenses eat into investment returns, but since they are withdrawn automatically from the account, their impact often remains invisible to the investor. By contrast, auto buyers generally know if someone’s trying to sell them a gas-guzzler, since mileage data is readily available and well understood.
About a third of Rebalance IRA clients come from brokerages, where they had been paying as much as 2.5% annually in overall fees, Tuchman said. That’s $25 per $1,000 per year, so an investor with an account balance of $100,000 will lose $2,500 annually to fees. “The compounding of fees has a greater and greater impact, the longer you keep the assets,” said Fredrik Axsater, global head of defined contribution at State Street Global Advisors.
Under the new regulations, the broker would have to put the client’s interests first when giving retirement investment advice. While he can continue to receive commissions, he would need to disclose potential conflicts of interest. A written agreement would also provide the client information on fees and compensation and provide an illustration of investment returns.
To be sure, these new regulations won’t change the underlying considerations that investors will weigh when deciding what to do with an old 401(k), including whether they can improve on the investment selections and fees that the 401(k) offers.
But proponents say the regulations will raise the bar for retirement investment advice, paving the way for a more a secure future

Culled from Marketwatch

Poll: 13 million Americans commit financial infidelity-By Tony Mecia

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About 13 million Americans could be maintaining secret bank accounts or credit cards without their partners' knowledge, according to an analysis of a recent poll conducted for CreditCards.com.

One in 20 respondents who are living with a spouse or partner admitted they have or have had a checking or savings account or credit card their significant other didn't know about. Multiplying that percentage by the number of U.S. adults yields nearly 13 million Americans who are withholding financial information from their loved ones -- and that counts only those who confess their secret accounts to a random pollster over the phone.
Financial counselors and relationship experts aren't shocked by the numbers. They say secret accounts are surprisingly common.
The hidden cards and bank accounts, they say, typically don't spring from sinister motives, like wanting to buy drinks at the strip club without spousal oversight. Rather, the secret accounts tend to stem from misunderstandings about how to manage money in the relationship, or maybe even from good motives.
"Sometimes, there are dark, sinister activities they are involved in that they shouldn't be involved in, but the norm I have seen is people who are just trying to make some headway in solving a problem, but they get into trouble with that," says Chuck Bentley, CEO of Crown, a large Christian financial ministry based in Knoxville, Tennessee. "They have good intentions, but it goes really bad."
For example, Bentley says he is friends with a couple in which the husband secretly racked up debt amounting to double the annual household income, on credit cards and loans from friends, to try to finance his business. The husband finally broke down and confessed to his wife, who was shocked. Working together, they cut expenses, increased income and paid off the debt in four years -- without filing for bankruptcy or divorcing.
"They are a beautiful example of what can be done even when someone has a hidden bank account," Bentley says.
Talk early and often
The origins of secret accounts can start early in a relationship.
Laurie Berzack, a Charlotte, North Carolina-based professional matchmaker and relationship coach with Carolinas Matchmaker, advises couples to address potentially touchy subjects early on -- topics such as religion, family and money. Even in the first few months of a relationship, she says, it can be helpful to ask, "How do you like to spend your money?" and "Are you a spender or a saver?" The answers can be illuminating and can provide the basis for future conversations.
"The problem is that a lot of couples don't have that conversation," Berzack says. "They're afraid to have the money conversation. That's where people get into trouble and start lying and hurt feelings are created."
As the relationship progresses and a couple decide to unite their finances, experts say it's important to maintain the ability to spend independently. But there should be rules or a budget and no secrets.
Each couple will have a different system or spending threshold. In the CreditCards.com poll, 41 percent of those surveyed said their spouse or partner should be able to spend $100 or less without telling them. At the other extreme, 24 percent said the limit should be more than $500.
In addition, 19 percent said they had spent more than $500 without telling their spouse or partner. Men were nearly twice as likely than women to have spent that much without telling.
Coming clean
Financial counselors say neither sex is more likely to be secretive about finances.
"It's definitely split evenly between men and women," says Kim Cole, education outreach coordinator with Navicore Solutions, a national nonprofit counseling agency.
Cole says her agency often receives panicked calls from people who have run up credit card debt and want to eliminate it before their spouse finds out. While sometimes that works, the agency typically will "push them to have that uncomfortable conversation."
Many times, the situation seems dire. But it doesn't have to end badly.
"There are a lot of hurt feelings and a lot of anger, but when they come clean, it tends to be a bit cathartic for the relationship," Cole says. The conversations "tend to end a lot better than they initially think it will."
The survey also found:

• Seniors are more likely to think their spouses should disclose all but the smallest purchases. Among those 65 and older, 24 percent said their partner should spend only $25 or less without telling them -- the highest figure of any age group, and twice as many as in the 18-29 age group.
• Men were more likely to be OK with their spouse making big purchases. Some 30 percent of men but just 18 percent of women said they were OK with their spouse or partner spending $500 or more without telling. 
• But men were also more likely to make those big purchases, with 24 percent saying they had spent $500 or more without telling. Just 14 percent of women admitted to similar big and secret purchases.

Survey methodology
The CreditCards.com poll was conducted by Princeton Survey Research Associates International Jan. 7-10, 2016. Princeton obtained telephone interviews with a nationally representative sample of 1,003 U.S. adults 18 years or older, including 706 adults living with a spouse or partner. Statistical results are weighted to correct known demographic discrepancies such as age, sex, race, education and geographic location. The margin of sampling error for the complete set of weighted data is plus or minus 3.6 percentage points, and plus or minus 4.2 percentage points for respondents living with a significant other.

Culled from creditcards.com

South Africa's Zuma proposes to partly pay for controversial home improvements

South Africa's President Jacob Zuma attends the opening ceremony of the 26th Ordinary Session of …

JOHANNESBURG (Reuters) - South African President Jacob Zuma has proposed that the auditor-general and finance minister determine how much money he is liable to pay for controversial state-funded improvements to his rural home, Zuma's office said.

Public Protector Thuli Madonsela said in a 2014 report Zuma had "benefited unduly" from some of the upgrades that cost nearly 250 million rand ($15.3 million) and included a cattle enclosure and amphitheatre.
Madonsela said Zuma should repay the state for the costs of the unnecessary renovations, but the president has denied any wrongdoing.
Opposition parties, particularly the militant left-wing Economic Freedom Fighters (EFF), have since frequently heckled Zuma in parliament over his refusal to pay the money.
The EFF and the Democratic Alliance (DA) have taken the matter to the Constitutional Court, with a hearing set for next Tuesday.
The presidency said in a statement issued late on Tuesday night Zuma had proposed that the chief auditor and the finance minister fix the amount due from him in order to "achieve an end to the drawn-out dispute".
DA leader Mmusi Maimane said on South African radio his party would not agree to a "settlement that will undermine the public protector". EFF spokesman Mbuyiseni Ndlozi said the movement would consult its lawyers.
"President Zuma is not responding out of the goodness of his heart or out of understanding the importance of respecting the .... recommendations of the public protector," Ndlozi said.
($1 = 16.2925 rand)

(Reporting by Stella Mapenzauswa; Editing by Paul Tait)

Culled from Reuters

Money Can't Buy Retirement Bliss -By Mark P. Cussen

The financial industry has spent billions of dollars educating the public about all the financial aspects of retirement. There are seminars. There are books. There are pamphlets. There are websites. There are classes, and, of course, there are the ubiquitous infomercials. Virtually every angle and niche is explored. Ultimately, retirement in America has come to be portrayed as either heaven or hell, with heaven coming to those who plan ahead (or simply buy the products and services being advertised) and hell awaiting those who do not.
What the financial industry has failed to address is the emotional ramifications of retirement - the inevitable psychological adjustment process that must be made. Even those who plan ahead financially can run into spousal friction and feelings of emptiness they didn't expect. In this article, we'll examine some of these emotional hurdles and give you strategies to cope as you make the transition.
Brand New YouRetirement in America today is very different from what it was in the past. The generations who lived before the advent of modern medicine could generally expect to live about 10 years after they stopped working. The main goal for many was to simply maintain their health and get their affairs in order before death. But the dramatic increase in longevity has opened up a new frontier of living for modern retirees, who may still have 10 to 20 years of healthy, active living during retirement. 
This increase in lifespan can sometimes pose challenges for retirees. At this point, uncharted waters must be navigated, as a new, post-retirement identity must be formed and a new daily routine established. Many people base their identity around their working self. They see themselves a chef, a teacher or a CEO, for example. The central question of "who am I?" must be readdressed as the individual's identity transitions from being a professional to being a retiree.
Those who had highly successful careers often find this particularly difficult. For example, the former CEO who is used to making high-level, important decisions may find it hard to accept a world where his or her decisions are questioned. Former professionals become accustomed to a certain level of inherent respect that often evaporates in retirement.
Other psychological factors must be addressed as well. These include professional goals that may never be accomplished and professional failures that may never be rectified. The end of one's professional career and the opportunity to pursue hobbies and leisure activities can create an emotional paradox. The prospect of an idle retirement can be refreshing for some but panic inducing for others.
Together Again - For Better or Worse
Unresolved marital issues can also take retired couples by surprise. During the working years, it is common for married couples to develop an unspoken agreement where emotional needs become subordinated to those of the children while one parent - or both - focuses on work. Familial duties often become a priority, pushing everything else to the side. But retirement often brings about the end of these arrangements and puts everyone on a level emotional playing field. Long-suppressed resentment over past unmet emotional needs can quickly bubble to the surface.

While many couples look forward to spending more time together during retirement, some grapple with how much time is too much. During the working years, many families have one primary breadwinner, while the other spouse either works fewer hours or stays home. A spouse who stayed home and met the family's non-financial needs will likely consider the home to be his or her domain and view the newly retired spouse as an "intruder". Spending more time with a spouse can also bring annoying personal habits to the forefront. A new balance must therefore be found between personal time and togetherness.
Determining who controls the finances is another challenge that many retired couples face. During the working years, this chore is often undertaken by only one person. If this arrangement changes after retirement, it can lead to feelings of bitterness and resentment if not handled delicately.
Coping StrategiesThere are a number of things retirees can do to ease into their retirement lifestyles. Simply understanding the stages you will face is a key step. It's best to prepare for mixed feelings and anticipate some of the issues explained above. Honest communication with your spouse is essential, as is giving him or her adequate physical and emotional space. Staying mentally and physically active and celebrating your new life stage is also important.
But these basic measures may not be enough for many retirees; for some, the transition between employment and retirement is too great to absorb immediately. An excellent solution for these retirees is finding a part-time job or volunteer work to help with the transition process. Perhaps this is the time to find employment related to a hobby or other interest. For instance, bookworms could find part-time job at the local library, while a model train buff could work at a hobby shop.
The Marketing IllusionMuch of the marketing material produced by financial service providers for retirees portrays a fantasy world, one with no divorce, widows or widowers, depression, loneliness or illness. There is often an insinuation that all of these things can be avoided simply by making the right financial choices. These companies have done much to blur the distinction between making arrangements for retirement and the actual process of becoming a retiree. The key is to remember that no retirement, no matter how financially well-planned, will be pain free. Solid financial planning is important, but don't buy the fantasy that many financial companies sell.
ConclusionRetirement can bring many questions about one's purpose and self-worth that have no ready-made answers. However, a good place to start is with an open and honest discussion with your spouse or partner about your planned retirement lifestyle and attitude. This will help to ensure that there is no friction between two people who will likely spend the most time together during retirement, and likely provide the majority of the necessary emotional support.

 Source : investopaedia

The safety of the Pension Fund- Odunze Reginald C

In a presentation in 2009 in Abuja , a customer reacted that his father could not access his money in the defunct old scheme, we took time to explain the differences in the schemes and the modalities for his father to access his fund.

Even though he finally access his funds, it was a difficult task convincing him to partake in the new scheme.

In all the presentations , I have done in pension related matters , numbering about 3000, spanning over a period of seven  years in the following sates  Zamfara,  Nasarawa, Abuja , Enugu, Imo , Kwara, Osun, Lagos etc  in both private and public sectors, the most re occurring question is how safe is my contribution.

The safety of any fund is the basic criteria in setting up the fund, when a fund has no safety; it is of no use in setting it up. Therefore we commend the National Pension Commission ,  as the pension assets hit 5 trillion Naira and still counting.

In an article by Odunze which appeared in 2011, titled “The Task of managing and safeguarding the pension fund” Odunze opined that  “With the call in Europe and America for an extension of the retirement age due to the failure of the pension schemes as a result of the last global financial crises, it becomes pertinent for the pension fund administrators, the pension fund custodian and the National pension commission . PenCom to embark on stringent financial and investment strategies to put the schemes on sound footings. This becomes necessary to safeguard the pension fund” But this has since becomes as the fund is continuously appreciating.

The failures of the National Provident Fund Act of 1973, The Pension Act of 1990 and the NSITF Act of 1993 are all fresh in our memories. The business environment is becoming more and more complicated, so also is the human nature and behavior. They all fail because of several reasons, which included corruption, not maintaining a good data base, not proper oversight function, non challant attitude of the officials involved.

The Pension Reform Act 2004 clearly pointed the provisions of Pension fund custodian, pension fund Administrator and the National pension commission have careful delineated duties that serves as checks and balances to the establishment, administration and running of the schemes to make it safe and profitable to both the contributors, retirees, and return on assets to the administrators and other stakeholders in the scheme.

The recent amendment of the 2004 Pension Reform Act, which resulted in its repeal and the subsequent provisions of the Pension Reform Act 2014 will positively consolidate more on the pension assets as the relevant portions of the law has increased the coverage to states, local governments, and employers with minimum of three employees.

 There is also the consolidation of the pension reform act as aptly captioned by the highlights of the pension reform act 2014, it should be noted that   “The Pension Reform Act 2014 has consolidated earlier amendments to the 2004 Act, which were passed by the National Assembly. These include the Pension Reform (Amendment) Act 2011 which exempts the personnel of the Military and the Security Agencies from the CPS as well as the Universities (Miscellaneous) Provisions Act 2012, which reviewed the retirement age and benefits of University Professors. Furthermore, the 2014 Act has incorporated the Third Alteration Act, which amended the 1999 Constitution by vesting jurisdiction on pension matters in the National Industrial Court. 

Punishment for defaulting employers : the pension reform act  in Section 11 (6) of the Act provides that an employer who fails to deduct or remit the contributions of its employees within 7 working days from the date salary is paid, in addition to making the remittance already due, will be liable to a penalty to be stipulated by the Commission.

Furthermore, Section 105 (1& 2) on offences under the Act  empowers the National Pension Commission (PenCom), subject to the fiat of the Attorney General of the Federation (AGF), to institute criminal proceedings against employers who persistently fail to deduct and/or remit pension contributions of their employees.

With all these provisions, the scheme has the necessary provision to ensure compliance and safety of the fund as pension fund custodians are expected to have an indemnity of three times the value of their fund, in the case of custodian going bankrupt.

Like Johny Walker we should not  be deterred by where we failed, but we set our minds on our destination and that is why we are bent on the safety of the fund.

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing  consultant  a social media and social marketing consultant , you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and at Linkedin@reginald odunze.