In addition to your well-known fiduciary concerns, fees and investments, you’re probably concerned about actually getting your employees financially prepared for retirement. You’re not alone.
Fidelity has released the findings of their 2018 Plan Sponsor Survey. Of the more than 1,100 sponsors surveyed, the top concern for plan sponsors is whether their plan is adequately designed to prepare workers for retirement. Does the term “retirement readiness” ring a bell? Let’s cut through the industry jargon. Being prepared for retirement simply means – “are you saving enough”? For plan sponsors, it means – “how can I get my employees to participate in the plan and save more”?
Centurion continues to stress that plan sponsors must benchmark your fees and monitor the investment menu. We also encourage plan sponsors to review plan design and incorporate features that promote increased employee participation and savings rates.
Here are two successful plan design strategies:
• Add and/or adjust employer-matching contributions: Nearly 40% of plan sponsors added or changed matching contributions in the last year. The goal is to increase participation and savings.
• Add Automatic Enrollment: 25% of plans added an auto-enroll feature in the past year. In total, about half of the plan sponsors in the survey now use auto-enrollment. Of plans that auto-enroll employees, the participation rate among employees age 20-29 is 84%. For plans that don’t auto-enroll, the rate drops to 31%!
Preparing for retirement begins with a simple fact: Save more and save early. In addition to your other fiduciary duties, plan sponsors must promote retirement savings.
Contact Centurion Group to learn how plan design changes can impact your employees and improve retirement outcomes.