Use of automatic enrollment in defined contribution plans has grown considerably in recent years as plan sponsors seek to boost employees’ participation and retirement savings. Concerned about the fact that only 32 percent of workers nationally who have access to a 401(k) or 403(b) plan participate, employers are moving to automatic enrollment out of a sense of responsibility.
Two-thirds of American workers are not saving enough to retire comfortably, according to several studies. Most have access to retirement savings plans but fail to take full advantage of them. U.S. Census Bureau researchers announced in 2017 that about 80 percent of Americans have access to an employer-sponsored retirement savings plan. However, only 32 percent of workers participate. This alarming statistic illustrates why improving plan participation and education has become a top priority for plan sponsors.
Plan sponsors must keep up with the ever-changing rules and regulations regarding keeping their participants informed. However, increasing participation rates is vital to your retirement plan. Although you may not have given much thought to the way your employees interact with your retirement plan’s web portal, user experience has a significant impact on participant engagement. The good news is that a full-featured, responsive website for your plan likely will engage and excite your employees, and thus promote participation rates. Move forward from archaic paper forms and encourage the use of technology for efficiency and safety to drive plan participation.
Unfortunately, falling victim to a cybersecurity attack is becoming increasingly common. It seems that at least once a week, another major company has fallen prey to the persistence of cyberattackers. Retirement plans are notorious targets for these attacks because they involve a high volume of sensitive information that is invaluable to criminals with malicious intent. Plan participant and financial information is generally shared with many different parties, making it more vulnerable to such threats. Retirement plan cybersecurity is crucial. We will discuss current risks as well as some useful tips for protecting your plan participants’ information.
When a person is appointed or is being sought to be member of a retirement plan committee, the natural question is to understand exactly what the person is committing to. Simply stated, a committee member is a fiduciary, who is expected to always act on behalf of plan participants, using the care of a person familiar with retirement plans and investments. Fiduciaries are expected to exercise good care in the handling and diversifying of the plan’s assets, including the selection and monitoring of the investment options.
Yes, fiduciaries do have the potential for personal liability, both civilly and criminally. This is mitigated by following and documenting a good governance process, as well as by the bonding and liability insurance coverages. There is also a voluntary correction opportunity with the DOL and IRS if something does go awry.