As a result of enhancements to the company’s suite of digital retirement readiness capabilities, participants in many Voya-administered plans will be able to visualize and understand—as soon as they enroll online in the plan—how their savings decisions translate into future monthly retirement income.
In addition, existing participants will benefit from new functionality that lets them factor Social Security and health care costs into their retirement planning decisions.
“Voya Financial is committed to helping Americans plan, invest and protect their savings so they can get ready to retire better, and this includes the critical point at which they first enroll in their workplace savings plan,” says Charlie Nelson, CEO of Retirement at Voya Financial. “Participants must make a number of key decisions when they join a plan—such as how much to contribute each pay period and what they need to save to meet their future monthly income goals in retirement. In order to make plan enrollment a more informed and effortless process, we’ve revolutionized the experience by connecting enrollment to the broader concept of retirement income goals. We’ve also added in unique features that let customers easily see and elect a contribution rate that gets them to their full company match, or which aligns to their peers who are potentially on track for a secure retirement.”
Findings from the Voya Retire Ready Index show, of those workers who were participating in an employer-sponsored retirement plan, one-third (33%) chose to save up to the amount their employer would match. One-in-five (20%) saved an amount that was determined automatically by their employer, while a slightly smaller group (17%) contributed up to the maximum amount allowed by the plan. Nearly one-in-three (29%) said they used “some other method” to determine their contribution rate.NEXT: A unique enrollment experience.
Christine Lange, head of Digital Solutions at Voya in Windsor, Connecticut, tells PLANSPONSOR participants need to start thinking about the goal of retirement income from the moment they enroll in a defined contribution (DC) plan. Voya is rolling out next month a new way to enroll. Participants will input some personal information then set goals, such as the age they desire to retire and their desired income replacement rate. They can also input how much they have already saved elsewhere.
“It’s not motivating to say, ‘You need $6 million to be able to retire. It’s more motivating to say, ‘Here’s what monthly income you will need, here’s what you may already have, and this is the gap,’” Lange says. The enrollment page shows what retirement income can be achieved at a 6% deferral rate, but employees can use sliders to increase or decrease that amount. “They are not looking at $108 taken out of their paycheck, they are seeing that $108 plus match and earnings will equal as a monthly amount in retirement,” Lange notes.
Employees can click for more details that show how much of the estimated income comes from Social Security, how much from savings, and how much from match. There is an “I’ll Go With These Choices” button for employees to enroll at the savings amount and in the default investment fund shown on that page.
However, Lange notes that employees can look into more options. They can see what “people like you” that are on track to achieve retirement income goals are deferring. They may also go to an investment options page that shows different tiers of investments—do-it-for-me, guided based on risk or retirement date, and do-it-yourself.
The employee is returned to the first page showing the impact of her options on retirement income, and she can click on ‘I’ll Go With These Choices’ to enroll.
A “before you go” page reminds employees if they are leaving employer match on the table and offers them the ability to set up auto deferral increases. There are options to set up beneficiaries and help employees consolidate assets into the plan.NEXT: New participant website capabilities.
The Voya Retire Ready Index found that more than six-in-ten (61%) workers were significantly concerned about their inability to pay for health care expenses in retirement. A majority (58%) were also significantly concerned that they would end up with fewer Social Security benefits than expected, yet almost half (45%) planned to rely on Social Security as a major source of their income in retirement. Adding to the challenge, two-thirds (66%) of workers planned to start taking Social Security at age 66 or younger—possibly missing out on the opportunity to collect their maximum benefit.
“We want employees to have a visual picture of retirement income,” Lange says. “They log in [to the participant website] and see they have a goal on the first page; it helps them understand the purpose of the retirement plan.” The website uses 70% income replacement as a starting point, and employees can use a slider to change that goal. They may also input other savings such as from an individual retirement account (IRA) or pension, selling a home or their spouse’s savings.
Lange says Voya has found health care is a mystery to most people. Website users can click on a health care in retirement tab and a blue overlay shows them how much money health care will take from their retirement income. Employees choose their age and state of residence; Voya worked with its adviser network to get data about health care in retirement. Users may also view a video and find information to read about Medicare.
Users may also click on a Social Security tab and find sliders of expected retirement age and age the employee plans to start claiming Social Security. The tool shows the impact of taking Social Security early, Lange notes.NEXT: A differentiator for Voya.
According to Lange, the website shows employees how they are doing, how to do better, and what to change to reach their goals. They use sliders to show the impact of changing savings percent, date of retirement and investment returns on retirement income. A “Make Change Now” button allows them to implement the changes showing on the screen easily.
Lange says that after participants used the website enhancement, 85% indicated they now know where they stand in attaining their retirement income goal, 84% know what steps to take to improve, and 70% are happy, confident or optimistic about their retirement. Of those that have used the website, 25% have taken action and increased contributions by 15% in any given quarter.
The new enrollment, Social Security and health care features will be accessible on mobile devices later this year. “We intend to tell folks to bring their mobile devices to enrollment meetings and get them started interacting with the plan online,” Lange says.
Nelson tells PLANSPONSOR, “I don’t know of any other source that participants have to use sliders and see this visually—to engage and see the impact. It will both engage advisers with participants as they look at this together, and plan sponsors with participants through the enrollment experience.”
Nelson says this is just a part of Voya’s focus on digital solutions. “When I joined, Voya announced more broadly an initiative to invest about $350 million in the next four years in a variety of initiatives—digital is one. It extends to mobile and other technology than myOrangeMoney website changes,” he says. “I’ve been thoroughly impressed with where Voya is with digital solutions and have put it on the roadmap for development on both the participant and plan sponsor level. It’s a very important part of our differentiators in the future.”