The traditional plan participation rate benchmark is no longer considered a leading indicator of a successful retirement plan. Increasingly, plan sponsors are measuring a host of factors, of which participation rate is only one number. Elaine Sarsynski, Executive Vice President and Head of Retirement Services at MassMutual, spoke with Alison Cooke Mintzer, editor-in-chief of PLANSPONSOR, about refocusing plans on outcomes and looking at benefits holistically in order to truly gauge success.
PS: How are plan sponsors benchmarking participant retirement readiness?
Sarsynski: When we talk with our plan sponsors together with our advisers, we typically focus on a RetireSmart analysis tool that we have here at MassMutual. This tool helps a plan sponsor answer a very specific question: “What percentage of my employees will be on track to retire with monthly replacement income of, say, 75% at the age of 67?” These variables obviously will depend upon the plan and the individual’s personal goals.
This is a report card that measures the probability of retirement success of a plan sponsor’s employees. We like to think that each plan sponsor is going to have close to 100% of employees on track, but unfortunately, we’re seeing about 40% of employees are currently on track to retire with sufficient replacement income. What we want to do is drive that behavior at the plan level so that we continue to see improvement in replacement income levels for all employees.
For participants, MassMutual’s RetireSmart Ready Tool is available on our participant website. In a matter of minutes, an employee is able to see a report that shows what level of replacement income he or she is on track to receive based on current criteria such as savings levels, asset allocation, et cetera. If an employee sees that she may only be at 50% probability of retiring at her desired goals, then the tool shows some options for making changes immediately—perhaps increase the deferral rate or change the asset allocation, for example—that would help increase the likelihood of reaching her goal. The participant can select and implement his or her changes right on the spot.