According to Carol A. Idone, principal author of “Improving Participant Outcomes: An Action Plan for Plan Sponsors” and vice president of business development at Strategic Benefit Services (SBS) in Rensselaer, New York, the biggest obstacle plan sponsors need to overcome is employee inertia. She said, while most employees understand the need to save for retirement, they lack the expertise, desire or time to formulate and carry out a retirement savings strategy.
Idone told PLANSPONSOR, “I think the most important thing that plan sponsors can do to have an immediate impact on participant outcomes is to add automatic features to their plan, including both auto-enrollment and auto-escalation.” Idone noted that while the other items mentioned in the paper, such as plan options and investment menus, are important, they are predicated on people participating in the plan.
“For those who are already participating in the plan, improving the investment menu or changing the matching formula may get them to their retirement goal quicker, or at least increase the likelihood of reaching their goal, but does nothing if someone is not yet enrolled,” she said. “I strongly feel that if a plan sponsor wanted to do just one thing to help their employees achieve their retirement goal it would be to put them in the plan and force the employee to make a conscious decision to opt out. Study after study shows most will not opt out.”
The white paper examines steps plan sponsors can take to provide greater assurance that employees will be able to generate sufficient retirement income. The paper also examines factors that plan sponsors should consider when assessing the value of the retirement plan offered to their employees.
SBS is a retirement plan consulting firm that works with finance and human resource (HR) leaders. SBS is also an affiliate of the Healthcare Association of New York State (HANYS).
A copy of the white paper can be found here.