A retirement savings account is one of the most sought-after benefits an employer can offer. However, plan sponsors can sometimes struggle to effectively communicate a plan’s benefits to employees in ways that boost engagement and enrollment. Don’t let your plan wither on the vine; follow these seven key steps plan sponsors can take to increase employee participation in your retirement plan.
Although U.S. stock indexes are hovering at or near all-time highs, many American workers still aren’t financially secure enough to retire. In response, the Setting Every Community Up for Retirement Enhancement (SECURE) Act focuses on promoting lifetime income options like annuities within a 401(k) and incentivizing businesses to expand their retirement offerings like auto enrollment. The Act also liberalizes the existence of Multiple Employer Plans (MEPs) for plan sponsors to pool their investments and plan administration usually at a cost savings.
This Act officially became law in December 2019, marking one of the most comprehensive retirement reform packages employers have seen in years. What should plan sponsors and participants know about these changes?
The number of U.S. workers who are covered by a defined benefit pension plan dropped by nearly half between 1980 and 2008, from 38 to 20 percent, and continues to steadily decline. More employers have adopted a defined contribution plan, which shifts the responsibility of saving and making investment decisions to their employees. However, many participants underestimate how much they should have in retirement and can deplete their resources much sooner than planned. Thus, in the absence of a pension plan, the need for retirement lifetime income solutions is evident. What should plan sponsors know about adopting and implementing lifetime income solutions in their plan?
In 2016, millennials became the largest generation in the U.S. labor force with an estimated 56 million workers. Born between 1981 and 1996, millennials now account for more than one out of every three working Americans. Despite its size, this generation is often overlooked by plan sponsors due to their focus on the needs of those participants nearing retirement. Without retirement plans tailored to meet their own barriers, millennial workers struggle to save adequately for retirement. While an obvious roadblock may be lingering student debt, millennial would-be savers face several additional unique obstacles. This multifaceted struggle presents plan sponsors with both a challenge and an opportunity. To attract and retain the largest age group of U.S. workers, employers need to consider the unique needs of this generation in a retirement plan context. Read on to learn how to encourage millennials to participate in your retirement plan.
There is no single, preset approach to designing an investment menu for defined contribution retirement plans. Accordingly, there are a plethora of highly contested ideas and theories around menu construction and how to maximize the value to participants through the plan’s investment offerings. One of the most prominent, and often most polarizing, menu design considerations is the superiority of active or passive management for plan investments. With a fundamental understanding of how active vs passive investing approaches work, as well as the pros and cons of each, plan sponsors can make more informed decisions in their menu construction.