1. Ready, Set, Retire: How Plan
Sponsors and HR Can
Facilitate Retirement
Readiness
Alan Spierer, UBS Institutional Consulting Group
Carol Buckmann, Osler, Hoskin & Harcourt LLP

2. A generation lost
Over 32 million late bloomers may never be able to retire, a population the size of that in the
state of California.
Boomers
• Working longer and working in retirement likely
• Younger boomers more anxious
• A projected 32 million will not be ready for retirement1
In 2011,
41 million workers
were retirement age
This will increase to
72 million by 2020
1 All sources below:
http://www.plansponsor.com/Downturn_Remakes_Americans_Retirement_Expectations.aspx
http://www.fidelity.com/inside-fidelity/employer-services/fidelity-investments-study-finds-shift-in-generation-y-attitudes
http://www.lifeinsuranceselling.com/Issues/2010/October-2010/Pages/MDRT-study-sheds-light-on-connecting-with-Generation-X.aspx?page=1
http://www.plansponsor.com/Younger_Boomers_Worry_More_about_Retirement_than_Older_Boomers.aspx
http://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-early-boomers.pdf

3. National News
Good news?
The average 401(k) account balance increased a compound
annual average growth rate of 5.4% over the 2007 – 2011
period, to $94,482 at year-end 2011.
October 2013 – No. 391
401(k) Participants in the Wake of the Financial Crisis: Changes in
Account Balances, 2007 – 2011
By Jack VanDerhei, EBRI; Sarah Holden, ICI; Luis Alonso, EBRI; and Steven Bass, ICI

4. Bad news?
23rd 2013 Retirement Confidence Survey:
Number of workers confident of having enough money
for a comfortable retirement still at 2011 record lows.
March 2013 – No. 384
Ruth Helman, Nevin Adams, Craig Copeland, and Jack VanDerhei, “2013 Retirement Confidence
Survey: Perceived Savings Needs Outpace Reality for Many,” EBRI Issue Brief,

5. Retirement will be delayed
Percentage of population by age group planning to delay retirement
due to the 2008 financial crisis*
11% 23% 42% 44%
Age 25 – 34 Age 35 – 44 Age 45 – 54 Age 55 – 64
*Source: The Conference Board Consumer Confidence Survey (March 2010).

6. 2013 Mercer Workplace Survey
What’s causing sleepless nights?
· Saving enough for retirement
· Keeping up with monthly expenses
· Retirement healthcare expenses

7. As health savings accounts become more prevalent, there will be competition for savings in
the 401(k)
Do I save for
healthcare
costs today? Do I save for
retirement for
tomorrow?

8. Coping with Medical Expenses
· Traditional retiree medical programs are being
terminated, but consider the following:
· Health Savings Accounts can accumulate income
for future medical expenses.
· The Affordable Care Act now makes coverage that
was previously unavailable or unaffordable
available to early retirees
· But note Medicare as secondary payer rules
8

9. Use HSAs to Boost Retirement Savings
9
· Triple tax free accounts are available until you
enroll in Medicare
· Must be used with high deductible health plans-annual
deductible limit of at least $1250 for
individuals and $2500 for families in 2014
· Unlike an FSA health reimbursement account,
amounts not used for qualifying medical expenses
can be carried over to future years
· Employees can make 2014 pre-tax contributions of
$4300 (individual) or $7350 (family) if over 55
· Employers may also contribute
· No tax if amounts are withdrawn to pay qualified
medical expenses
· No 20% penalty if used for non-qualifying
purposes once you are 65

10. Bad news?
“And we’ll never retire. We can’t. The mortgage
is underwater. We’re in debt up to the Rogaine
for the kids college education. And it serves us
right—we’re the generation who insisted that a
passion for living should replace working for
one.”
The Baby Boom: How it got that way…And it wasn’t my
fault… and I’ll never do it again—P.J. O’Rourke, WSJ
December 1, 2013

11. Plan sponsors

12. 2011 press release
MetLife whitepaper finds that
employee financial wellness is
a growing global concern
for employers

13. Key findings
· Financial difficulties can have a negative effect
on worker productivity
· Carried out correctly, financial education can have a
beneficial effect on employee wellness
· Consumers are generally poorly prepared to make
good investment choices

14. Employee financial distress and work outcomes
Decreased
·Productivity
·Health quality
·Job satisfaction
·Pay satisfaction
Increased
·Absenteeism
·Work time spent on
personal financial
matters
·Healthcare costs
·Turnover
&
References noted can be found on PFEEF website at www.personalfinancefoundation.org

15. Fidelity plan sponsor attitude survey results—2013
· Retirement Readiness: Impact of an aging workforce
· Health premiums for seniors can be up to 5x higher than for younger workers1
· Workers in their 60s are twice as likely as workers under 40 to miss work due to a disability claim2
· 40% of the labor force is over age 50
1 America’s Health Insurance Plans (AHIP.org), January 2013
2 Cornell University, Employment and Disability Institute, Absence and Disability Management Practices for an Aging Workforce, 2012 data
3 U.S. Census Bureau, 2010 Census

16. Workman’s compensation claims are longer with
higher costs as workers age1
AGE OF CLAIMANT AVERAGE DURATION OF CLAIM AVERAGE COST OF BENEFIT PAYMENTS
AGES 45 – 64
66 DAYS $3,485
AGES 20 – 34
53 DAYS $2,227
1 NCCI Holdings—Workers compensation and an Aging Workforce, 2012 based on claims closed within 24 months

17. Workman’s compensation claims are longer with
higher costs as workers age1
AGE OF CLAIMANT AVERAGE COST OF MEDICAL PAYMENTS
AGES 45 – 64
$7,649
AGES 20 – 34
$5,073
1 NCCI Holdings—Workers compensation and an Aging Workforce, 2012 based on claims closed within 24 months

18. Employer insurance premiums increase drastically with age
20 – 30 year old 60+ year old
$9,000
$532
$2,500
$32
20 – 30 60+
Annual employer
healthcare premiums
Annual employer
disability income
premiums
Source: CIGNA (healthcare premium), www.lanl.gov (Voluntary LTD rates); AHIP (national average – available at http://www.google.com/url?sa=t&rct=j&q=ahip%20assurant%20national%20std%20and%20
ltd%20average%20cost&source=web&cd=1&ved=0CDQQFjAA&url=http%3A%2F%2Fwww.ahip.org%2FIssues%2FDocuments%2F2007%2FAn-Employer%25E2%2580%2599s-Guide-to-Disability-Income-
Insurance.aspx&ei=a3HTUNilMavV0gG7hIHoBA&usg=AFQjCNECKp6m-zsa5Xi4GU6pbS58eU9VXg&bvm=bv.1355534169,d.dmQ ); CIGNA, www.lanl.gov, MassMutual Analysis; CIGNA, www.lanl.gov, Social Security
Administration, Department of Treasury, MassMutual Analysis
Note: Assumes 50% male, 50% female

19. Employer insurance premiums and other shorterm cost
considerations from financially stressed workers increase
drastically with age
Dr. E. Thomas Garman
Productivity
Lawsuits
Increased
healthcare
costs
Note: HR Management Issue 7—”Financial Distress for Employees Means Lower Profits for Employers.”
Source: http://www.pfeef.org/press/press-releases/Employers-Waste-Money.html
Bad financial
decisions
Total cost of $2,024 a year for each financially distressed employee

20. Fidelity plan sponsor attitude survey results—2013
· What matters most to today’s plan sponsor
· Includes responses from 937 plan sponsors who use a wide variety
of record keepers—not just Fidelity
· Responses from plans with 25 to 10,000 participants
· Focused on plan sponsors using a financial advisor
· Respondents managing organization’s 401(k) plan

21. It is important to understand plan sponsors and
what kind of plan they want
Basic
protection
Health
plan
Retirement readiness
Participant as priority Plan as differentiator
Participant
Sponsor strategy
Plan basics Fiduciary as priority
Basic tools

22. Service plan sponsors look for
Top 3-ranked advisor services
75% 49% 32%
Providing performance
information on investment
options and guidance on
potential changes1
Providing employee education
on investment selection
Analyzing participation rates,
deferral rates, investment
allocations, and strategies for
improving plan performance
Plans with 25 to 2,500 participants
1 Investment professionals should consult with their firm's legal and/or compliance professionals before recommending investment option changes to a plan or plan participant, as certain restrictions

23. Relationships are important
How plan sponsors initially found their advisor:
36% 31% 28%
Referral from a
related company
Existing relationship with survey
respondent
Existing relationship with an
executive of the company
Followed by
18% 12%
Professional relationship Marketing or advertising
Totals may not add up to 100% due to multiple answer options. Across all plan sizes.

24. The sea of sameness
Margin pressure
Fee transparency
Flight to quality
Busy decision
making
I solve
problems and
can SHOW
you proof
I like golf
I can find you a
cheaper plan
I’m a 3(21)
fiduciary
I’m a 3(38)
fiduciary
I pick
investments

25. Retirement Advisor Council study
finding October 2013

26. Retirement Advisor Council study finding October 2013
Participants of nearly all clients of Advisors
who work exclusively with retirement plan
advisors receive an indicator of retirement
readiness.
1

27. Retirement Advisor Council study finding October 2013
Retirement readiness; reports bring about
change: 88% of all plans advised by retirement
plan advisors have received a plan level report of
retirement readiness, the majority of which have
taken action to enhance outcomes.
2

28. Retirement Advisor Council study finding October 2013
Four plans in five that partner with Advisors
who work exclusively with retirement plans
experience a deferral rate increase fewer than
half of plans with no advisors have experienced
a deferral increase.
3

29. Retirement Advisor Council study finding October 2013
Retirement Readiness: More than three in four
clients of retirement plan advisors
say more participants are on track to achieve
a successful retirement. 4

30. Retirement Advisor Council study finding October 2013
Outcomes: Deferral increases—among the 80%
of clients of professional retirement plan
advisors who have experienced a participant
deferral rate increase in the last two years, one
third have enjoyed an increase of at least 6%.
5

31. Investment Education Safe Harbor
31
· To address concerns about fiduciary liability, the
DOL issued a safe harbor for:
1. plan and investment information, including
required information under 404(c)
2. general financial and investment information
3. asset allocation models for hypothetical
individuals based on generally accepted
investment theories
4. interactive investment materials such as
questionnaires or worksheets

32. Investment Education Safe Harbor
32
· So long as specific investments are not
recommended to as appropriate for individual
participants—
1. Educator and plan sponsor are not
fiduciaries under Section 3(21)(A) of ERISA
(not giving “investment advice”)
2. The SEC says that the Investment Advisers’
Act of 1940 does not apply.
· Note that supervising fiduciaries have a duty to
prudently select and monitor the educators
· TIP: Sit in on sessions and monitor what they
are saying
· TIP: SEC and DOL are concerned about
recommending affiliated IRAs

33. Investment Advice
Pension Protection Act Exemption
33
· Individual Investment advice may be given to
participants by a fiduciary adviser under 2
permissible scenarios:
· 1. Level Fee Arrangement
a)Advice is based on generally accepted investment
theories and takes fees into account
b)The fiduciary adviser does not receive direct or
indirect compensation that varies depending on
the investments selected by the participant (does
not apply to affiliates)

34. Pension Protection Act Exemption
34
· 2. Computer Models
a)Use appropriate objective criteria to provide asset
allocation portfolios composed of investment
options available under the plan
b)Can request participant information on risk
tolerance, other assets and sources of income, etc.
c)May not favor affiliated investments
d)Must have written certificate from an eligible
investment expert that it satisfies applicable
requirements before used
• Expert is not fiduciary

35. Other Conditions of Exemption
35
If either method is used:
1. An independent plan fiduciary must
authorize the arrangement
2. An annual audit by an independent auditor is
required
3. Participants must be given required
disclosures
· Plan fiduciaries retain responsibility for prudent
selection and retention of adviser
· Note that pre-PPA guidance from the DOL is not
superseded by the exemption. See Advisory
Opinions 97-15A, 2005-10A and 2001-09A

36. What’s next?
Employer investment in quality workplace financial programs
rescues employees “and” employers
Employee benefits
·Decreases in personal financial distress
·Increases in personal financial wellness
Employer benefits
·Decreases in costs
·Increases in profits

37. The retirement plan as a financial wellness plan
Physical wellness
·Health insurance
·Health wellness program
Financial wellness in retirement
·Social Security
·Defined contribution balance

38. Final QLAC Regulations Permit New Payment
Forms-Should You Add Them to your Plan?
38
· The IRS has finalized regulations permitting on a
limited basis the purchase of life annuities outside
the minimum distribution rules generally requiring
distributions to begin at age 70 ½
· QLACs can begin at any time up to age 85
· QLACs may be purchased with only a portion of
the account-limited to lesser of $125,000 or 25%
of account balance
· The contract or certificate must state that the
annuity is intended to be a QLAC
· Return of premium feature permitted
· $100,000 applied at age 70 to purchase an annuity
beginning at age 85 will provide $26,000 to
$42,000 in annual income
· Special J&S rules

39. Restrictions
39
· Not available for defined benefit plans or ROTH
IRAs
· Defined benefit plan that pays lump sums could
permit rollover into defined contribution plan or
IRA to purchase a QLAC
· Even if ROTH IRA contract satisfies QLAC
requirements, may not be treated as a QLAC
· Can’t have cash surrender value or similar features
· Variable or equity-indexed annuities not permitted
· Payments can begin no earlier than age 70 ½ or
the calendar year in which employee retires

40. Open Issues and Concerns
· Fiduciary responsibilities and obligation to investigate
financial condition of insurer
· Concern about future changes in insurer’s financial
condition, but note existence of state guaranty funds
· Existing DOL authority as starting point re: fulfilling
fiduciary responsibility
· Portability
· Need for plan amendments
· Plan complexity
· Plan communications
· Reluctance of plans not serviced by insurance
companies to add annuities
· Uncertain market, although non-pension longevity
annuity sales are increasing in an otherwise flat annuity
market

41. Recommendations
1. Select a high quality financial advisor
2. Benchmark plan fees as 1st step in fiduciary best practices
3. Benchmark employee financial wellness with the help of quality vendors

42. Service plan sponsors look for
Employer action through plan design
Employee action
Hello every
one!

43. Legislative and Regulatory Proposals
43
· Automatic IRAs
· MyRAs
· Limit on DOL’s ability to define “fiduciary”.
· Lower caps on plan contributions
 Incentive to maximize now.
· New Obama budget proposal to exempt
retirement accounts that do not exceed $100,000
in the aggregate from RMD rules.
· Pending Regulatory Action
· DOL proposals to show participants the annuity
value of account balances

44. Questions?
· Alan.spierer@ubs.com
· 800-557-7031
· cbuckmann@osler.com
· 212-991-2581
44

45. Disclosures
This presentation has been prepared by UBS Securities LLC (“UBS”) for the exclusive use of the party to whom UBS delivers this presentation (together with its
subsidiaries and affiliates, the “Client”) using information provided by the Client and other publicly available information. UBS has not independently verified the information
contained herein, nor does UBS make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained
in this presentation. Any estimates or projections as to events that may occur in the future (including projections of revenue, expense, net income and stock performance)
are based upon the best judgment of UBS from the information provided by the Client and other publicly available information as of the date of this presentation. There is
no guarantee that any of these estimates or projections will be achieved. Actual results will vary from the projections and such variations may be material. Nothing
contained herein is, or shall be relied upon as, a promise or representation as to the past or future. UBS expressly disclaims any and all liability relating or resulting from the
use of this presentation.
This presentation has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial
instruments. The Client should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Client should consult
its own counsel, tax and financial advisors as to legal and related matters concerning any transaction described herein. This presentation does not purport to be all-inclusive
or to contain all of the information that the Client may require. No investment, divestment or other financial decisions or actions should be based solely on the
information in this presentation.
This presentation has been prepared on a confidential basis solely for the use and benefit of the Client; provided that the Client and any of its employees, representatives,
or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to the Client relating to such tax treatment and tax structure. Distribution of this presentation to any person other
than the Client and those persons retained to advise the Client, who agree to maintain the confidentiality of this material and be bound by the limitations outlined herein, is
unauthorized. This material must not be copied, reproduced, distributed or passed to others at any time without the prior written consent of UBS.
U.S. Tax (IRS Circular 230):
Any U.S. tax or other legal advice in this communication (including in any attachment) is not intended and is not written to be used, and it cannot be
used, by any person to (i) avoid penalties under U.S. federal, state or local tax law, or (ii) promote, market or recommend to any person any
transaction or matter addressed herein.
©UBS 2014. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC. SPE_Pres_WD0321_SpiA
© 2014 Osler, Hoskin & Harcourt LLP. All rights reserved.