At the recent PLANSPONSOR National Conference, Alison Cooke Mintzer, editor-in-chief of PLANSPONSOR, hosted a roundtable conversation with Elaine Sarsynski, executive vice president of MassMutual Retirement Services; Christine Marcks, president at Prudential Retirement; and Pat Murphy, managing director and head of distribution for New York Life Retirement Plan Services. These industry leaders discussed the retirement plan topics that most affect plan sponsors and their participants.
Cooke Mintzer: There is a changing definition of what people are thinking about as they are look towards their retirement. What’s the role of providers as we enter this new world?
Sarsynski: We focus on how to create a plan that motivates action on behalf of participants. The first thing we have to start doing with our advisers, and I would recommend plan sponsors think about, is to evaluate the type of retirement plan that you are looking for.
I always like to ask an adviser and plan sponsor: “Do you know how many people in your plan are on track to retire with a 75% replacement income on a monthly basis at age 67?”
We have to have a different conversation—plan sponsors together with advisers—about working longer, reducing expenses and trying to get some protection, perhaps through mortality insurance, as an additional benefit to help them.
Cooke Mintzer: As you look to Washington, what can we do as an industry to try to strengthen this private retirement system and address some of these challenges?
Marcks: Strengthening the current system needs to be a private-public partnership. We have seen improvement since the Pension Protection Act (PPA) was passed, as a result of the safe harbor protections that were put in place and the work that advisers have done with sponsors to drive better outcomes. But the picture isn’t complete.
First of all, there is the coverage gap. Half of eligible employees are not in a plan today.
There’s discussion about proposals to promote automatic individual retirement accounts (IRAs) and multiple small employer plans that would allow small business to offer retirement plans to their employees.
In terms of the existing plans, I think the Department of Labor (DOL) should focus on clarifying safe harbor rules for advice and education, because many sponsors and advisers want to provide better education to participants in these plans, yet are concerned that they may be crossing the line from a fiduciary standpoint.
Access to in-plan income options is another important area of focus. It’s about completing the plan—bringing defined benefit (DB)-like characteristics into defined contribution (DC) plans and providing safe harbor protections to employers for including income options in the plan.