Providers Can Help Improve Retirement Plans

By Rebecca Moore | April 27, 2015
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Smith agreed the plan should be designed appropriately for the group of employees. “Should you auto enroll, what should be your QDIA, and what services may or may not help employees, should they get one-on-one advice?” he queried.

Education Trends

Smith told attendees the biggest impact they can have on participant success is to provide financial literacy. And, employers should get Millennials involved. “Retirement isn’t usually talked about at all until someone gets to middle age, and in the defined contribution (DC) plan world, that is way too late,” he contended.

Other factors are affecting retirement savings decisions, added Kidwell. For example, since enactment of the Patient Protection and Affordable Care Act (ACA), more plan sponsors are moving to DC health plan offerings. “Employees can’t decide how much to defer into their retirement plan. Now they are asked to decide that and how much to defer into health savings accounts (HSAs),” he said.

Smith contended that HSAs are going to become part of participants’ overall retirement savings.

“When talking about retirement readiness, we’re talking about a participant’s net worth, not just account balance,” Kidwell said. “Financial wellness helps people with all financial decisions.”

Another trend for which providers are preparing is education at retirement. “It’s a role employers are going to have to begin to take,” said Smith. “They can’t continue to say, ‘The employee left. I have no more obligation.’”

Phillips said there will be more focus on total retirement education, including education about non-traditional ideas like reverse mortgages.

Plan sponsors must find unbiased people to talk to participants about what to do with their assets when they exit the plan, Smith contended. They should offer alternatives that do not benefit the person educating participants. “Older workers cost employers more money, so they need to help employees retire, educate them about their options, push them to retire and offer advice,” he added. “Employees want that type of help; they want to be told what to do.”