How to Gauge Retirement Plan Effectiveness

How to Gauge Retirement Plan Effectiveness

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Return on investment. Compound annual growth rate. Market outperformance. Preservation of principal.  Risk adjusted performance. There’s no shortage of metrics available to retirement investors looking to gauge the success of their portfolio. It can be a bit more challenging – and more qualitative – for plan sponsors to gauge their plan’s overall impact on their organization and their participants’ ability to retire.  It’s not easy to get a good sense of whether the 401(k) or 403(b) plan your institution offers stacks up favorably with employee expectations. With that said, however, it’s essential for sponsors to have a good idea of what makes their plan attractive (or not), how to measure it and the overall impact on employee satisfaction. Here’s how to start tracking your retirement plan – and its effect on the bottom line.

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Plan Participant Education is Essential For Employers and Employees Alike

Why Plan Participant Education is Essential

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Plan sponsors have a responsibility to participants to make retirement plan offerings cost-effective, accessible, easy to understand, and risk managed. Their clearest goal is simple: help to ensure participants are prepared for retirement. Unfortunately, that has proven easier said than done. An alarming body of research by the Employee Benefit Research Institute suggests that many employees are not likely to arrive at retirement age in a secure financial position. Similarly, well over half of all participants in a recent survey failed a basic 401(k) quiz, and an almost equal number reported lack of confidence in their ability to choose investments. These figures are symptoms of a larger issue: financial ignorance. Plan participants often lack a solid understanding of what drives the success of their retirement savings, and increasingly, their unawareness is leaving them unprepared to leave work. Implementing plan participant education is key.

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