Taking from a panel discussion at our recent PLANSPONSOR National Conference, I offered a list of issues that may keep plan sponsors up at night, and all but three respondents chose from that list. How to increase employee participation and savings rates when they have competing expenses topped the list, with 47.2% of plan sponsors saying that’s an issue they worry about. “Making sure administrative processes are error-free” (38.9%) and “how to measure participants’ retirement readiness” (36.1%) rounded out the top three.
One-quarter of responding readers indicated they are concerned about avoiding a regulator audit, and 22.2% chose “providing a good benefit while keeping costs low.” Nearly six percent said they have no worries, and nearly 3% said they worry about all items on the list.
The results for other issues were:
- How to de-risk our pension plan – 11.1%;
- Whether to offer automatic features in our plan – 13.9%;
- Making sure fees for participants are reasonable – 13.9%; and
- How a wave of employee retirements will affect our plan size and workforce – 5.6%.
The “other” responses included:
- Employees who won’t/can’t retire since they can’t afford to;
- The financial markets and elected official obstruction; and
- Competing for limited corporate resources (time and money).
Not a lot of verbatim comments this week; hopefully that just indicates my list was more than sufficient, although the comments made me realize “taking care of all fiduciary responsibilities” and “not getting sued” should have been on the list. Editor’s Choice goes to the reader who said: “At some level, on any given day, everything on this list - and more- give me pause/heartburn. But, considering the hours I keep, and the hour at which I get to bed, NONE of them keep me awake!”
Things I think about; Will my hair turn dark again and the wrinkles disappear when I hand the baton to the next retirement expert-in-waitng, or so what - what's really the downside to three hots n' a cot, or can (shudder) gub'ment really do it better. Then, of course, it's back to the grindstone where the rubber really meets the road.
We don't know what other assets a participant may have - so how are we to judge their retirement readiness solely on their 401(k) contributions and asset allocation. A younger participant with minimal conservative investments in our plan may be balancing it against a large prior 401(k) heavily invested in equities. Or maybe lots of current paycheck is paying the mortgage on a rental property they own. Why should employers assume an employee's 401(k) account is the only money the employee has?
Not only how to measure participants' retirement readiness, but how best to communicate it to them while they still have time to take corrective action which will likely be needed.
In 2010, we made a plan design change that addressed the long term volatility of our Defined Benefit Plan. You would think my worries are over, but even with the market at this current level I am worried about a crash. Employers are scared about shouldering massive increased employment costs with the ACA and they are simply not hiring anyone. This could lead to the next great recession especially if the employers’ fears are realized.
As a public plan, we've done all of the above - we've de-risked, have low fees, provide a reasonable benefit at a low cost, have regular clean audits, enjoy low error rates, and deliver a reasonable benefit for public employees. I just worry that another Wall Street meltdown or political interference will derail our efforts to become fully funded over time.
As the day to day contact from the recordkeeper. Whatever keeps my client up and night, keeps me up to. I see myself as a partner. I was surprised that Fiduciary Responsibilities was not on this list.
As a Trustee, my real major worry is that some unhappy person may hold me personally (legally) responsible for something done or not done.
Everybody has a unique situation so it is hard for a plan sponsor to design a program that uniformly makes everyone retirement ready.
At some level, on any given day, everything on this list - and more- give me pause/heartburn. But, considering the hours I keep, and the hour at which I get to bed, NONE of them keep me awake!
NOTE: Responses reflect the opinions of individual readers and not the stance of Asset International or its affiliates.
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