Concerns and Priorities Competing for Plan Sponsors’ Time and Effort

Having trouble managing concerns dictated by rules and regulations, while also addressing priorities for your retirement plan? That’s where providers come in.

When OneAmerica asked 1,019 plan sponsors, “What is keeping you up at night?”, respondents’ top concerns were fiduciary responsibilities (57%) and administrative tasks (45%).

However, when asked what are their plan priorities, 69% of sponsors cited “providing participation education” as the No. 1 priority, followed by “improving participation rates” at 67%.”

The survey results would suggest that retirement plan sponsor concerns are distinct from their priorities, but Melissa Musial, marketing research and data manager, retirement services, at OneAmerica in Wauwatosa, Wisconsin, says the two items are competing, but equally as important to plan sponsors.

She notes that plan sponsors are concerned about keeping up with their fiduciary responsibilities as dictated by rules and regulations, and she speculates that concerns about administrative tasks indicates human resources (HR) staffs are lean. “The immediate ramifications of concerns mean they take more of plan sponsors’ time,” she says.

Lorie Latham, senior defined contribution strategist for T. Rowe Price’s Global Investment Services (GIS) division, based in Baltimore, Maryland, says she is seeing concerns and priorities merge together a little bit.

She agrees plan sponsors are spending a lot of time and expense on governance structure and practices. She also says litigation concerns are front and center. However, according to Latham, the good news is that plan sponsors are being less reactive at litigation headlines; they are calmly taking a step back and looking at what they are doing for their plans and participants.

Latham says T. Rowe Price staff are having conversations with plan sponsors about increasing savings rates, increasing participant engagement, understanding and helping the different generations in the workforce and how to help participants address longevity in retirement. “At a very, very high level, we are having a lot of dialogue with plan sponsors thinking about measuring retirement readiness,” she says. According to Latham, challenges plan sponsors face is having a more balanced view of helping participants be retirement ready and looking at workforce management issues. “If employees can’t retire, it has direct ramifications on workforce management,” she says.

Managing concerns and priorities

Musial says she was pleased to see increasing plan participation was a top priority for plan sponsors, and education is a way to do that. She notes there is a dynamic shift in the industry that providing education is not just a feel good thing, but is foundational to ensure participants are ready to retire. “Education can be deployed in a variety of ways, and plan sponsors can use provider education tools,” she says.

Fiduciary concerns are very complex and can be specific per respondent, Musial continues. While plan sponsors cannot completely offload fiduciary responsibilities, just like with education, some fiduciary tasks and administrative tasks can be outsourced to plan providers or third-party administrators (TPAs), she says.

“It is so important to partner with providers to take some things off plan sponsors’ desks,” she concludes.

Latham, who says she has a long history of consulting, is encouraged to see that plan sponsors are spending more time and resources on defined contribution (DC) plans as they become the more primary vehicle for employee retirement savings. “Historically, DC plans were seen as supplemental plans and boards and committees would devote little time to them,” she notes.

Plan sponsors need to identify their plan’s mission and philosophy, Latham says. “If the end goal is offering a secure retirement for the workforce, plan sponsors need to put their time into connecting directly to their participant base and different generations, aiming for relevant and timely communications. Once [plan sponsors] get to know their workforce, they can lean into partnerships, getting more efficient at identifying needs and getting provider help,” she concludes.