Recognizing that the high cost of living (and student loan debt) makes it hard for workers to save, many employers are trying new strategies to inspire more engagement with company sponsored retirement plans, and ultimately help more workers aim into secure retirement.
Knowledge Is Power
By providing employees with access to professional advice and educational tools, and leveraging automatic enrollment features, many employers are working harder to encourage the practice of saving. As one plan sponsor wisely points out: “ I think education is key. If participants don’t know how short they are on their projected monthly income, they won’t feel the need to save more … .We need to break it down in simple terms for them and how the savings translates/projects out to the income stream needed at retirement.”
Although ultimately saving is an individual action, external challenges interfere, and plan sponsors are increasingly aware that more effort is required toward helping workers achieve sound retirements, given: “rises in cost-of-living, student loan debt, and low salaries.” For example, at 401k Specialist, a plan sponsor notes: “I think most young people have student loan debt and retirement is the last thing on their mind,” reported another plan sponsor. “I want to implement the Secure Act 2.0 student loan match provision next year if possible. It will at least help them get on track for retirement.”
Indeed, many employers are actively adapting new strategies to assist workers with financial plans. Summarizing a new study by TIAA, Amanda Umpierrez reports:
The study found that plan sponsors commonly cited several ways to help employees catch up on retirement savings, including providing access to professional advice, providing visual aids, helping with budgeting, and implementing automatic enrollment features. TIAA’s research focuses specifically on participants who have fallen behind on their savings or who have not saved at all, and surveys employers on their common approaches to incorporating long-term savings tools for these individuals.
According to the findings, plan sponsors say providing retirement income projections to those who have dropped behind is the most effective way to motivate more contributions. Specifically, walking participants through these projections for retirement income can reinforce the need to stay on course….“
Be Thoughtful–and Protective Too
Of course whenever exploring changes intended to assist employees, it’s best for employers to take the time to understand what is desirable and considered helpful. Some employees, for example, may find employer attempts at providing financial education inappropriate. As one plan sponsor reminds us: “Unless an employee is explicitly saying “I don’t know how to manage retirement planning; what do you advise?” I find that they kind of resent tailored/personalized direction–they feel either that it is intrusive ….”
Overall, as the Society for Human Resource Management puts it, “Being thoughtful about plan design can dramatically improve employees’ chances of accumulating wealth and achieving a secure retirement.” While doing the important and timely work of improving company sponsored benefit plans for employees, it is also critical for plan sponsors to tune into their own protections. With litigation and regulatory actions on the rise, no plan sponsor wants to find themself scurrying to find an ERISA defense attorney at the cost of $600—per hour. At Colonial, a whole year of Fiduciary Liability coverage is less than a few dollars a day, and we even include Cyber Liability coverage to protect the business and retirement plan in the event of a cyber breach. When it comes to ERISA, it’s best to be proactive: choose your affordable plan sponsor protection package here in minutes.
Armed with Colonial’s liability coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000. Uniquely, Colonial even includes Cyber Liability Insurance (for the plan and the business), locks in multi-year rates and offers installation payments. Conveniently, our Fiduciary With Cyber liability package is now available with a one year commitment. Protect yourself and your business, for a few dollars a day, now:
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