PSNC 2016: Dealing with Problematic Participants

Two retirement industry experts discussed how to respond to outspoken retirement plan participants.

An attendee poll before a discussion about dealing with problematic participants at the 2016 PLANSPONSOR National Conference revealed that 50% of attendees believe the thing that most creates participant backlash is a plan provider change.

When making plan provider, design or investment changes, Joe Trybula, an accredited investment fiduciary at Diversified Financial Advisors, LLC, said it’s all about communicating well to participants about the changes. He added that the tone of the communication will depend on the employee demographics of the company.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

When an attendee asked how to communicate about a change without having participants ask what was wrong with the previous option, Dan Peluse, director of Retirement Plan Services at Winstrust Wealth Management, said plan sponsors should respond with a statement such as, “Over the course of monitoring the plan/investments, we discovered a lower-cost/higher service offering solution.”

Problematic participants not only include those backlashing against changes, but those who may think they know best or who read or watch something that causes them to question their employer’s retirement plan. Trybula said plan sponsors should always be there and always answer these participants’ questions, and this will build trust between the employee and plan sponsor.

In addition, explaining things to these participants can benefit the company since they will likely convey the information to other participants.

One attendee said she constantly had participants who would come to her asking why specific funds were not included in the retirement plan fund menu. Peluse responded that participants do not understand the complicated process of selecting appropriate funds for the plan, and these participants should be told that the plan committee must look at demographics of the entire participant population to select appropriate funds.

Another attendee said one person who called to complain about the plan, put his spouse on the phone, who was also complaining. This points out that it’s not just participants that can be problematic. Trybula suggested plan sponsors can invite spouses to education meetings.

Peluse suggested plan sponsors document all these conversation they have with problematic participants.

And Trybula concluded, “No matter the amount of education, there will probably always be problematic participants.”

Senators Want to Help Participants Find Old DC Accounts

The Retirement Savings Lost and Found Act aims at simplifying the process of first locating and then consolidating abandoned defined contribution plan accounts. 

U.S. Senators Elizabeth Warren, D-Massachusetts,  and Steve Daines, R-Montana, have introduced the Retirement Savings Lost and Found Act, aimed at solving some of the issues Americans face when trying to manage and organize multiple defined contribution (DC) plan accounts.

According to the senators, the increasing prevalence of DC plans means workers have become responsible for tracking, managing, and consolidating multiple retirement accounts as they move from job to job.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“But moving accounts from job to job is not easy,” the senators warn, observing that Government Accountability Office (GAO) reporting has found that many Americans leave their jobs each year without giving their employers directions with what to do with their retirement accounts. The senators also cite a “recent survey by the investment management firm TIAA that found 30% of Americans have left an account at their previous employer, resulting in tens of millions of Americans with one neglected account and millions more with two or more accounts.”

The senators argue their bill would help to address some of the unintended consequences that have arisen alongside the otherwise overwhelmingly positive impacts of automatic enrollment into DC plans, as permitted by the Pension Protection Act of 2006. As has been widely reported,  auto-enrollment tends to result in more people in an employee population starting to save, but it also means more novice investors will gain accounts without taking active ownership. In rare cases, employees may not even realize they have a retirement account at a given employer, for example if they are part of a very large plan that lacks a solid communication strategy.

According to Senators Daines and Warren, the new proposal “uses the data employers are already required to report to create a national, online, lost and found tool for Americans’ retirement accounts. This means that with the click of a button, any worker can locate all of their former employer-sponsored retirement accounts. “

The senators say the Retirement Savings Lost and Found Act also would allow employers to more easily invest abandoned accounts into target-date funds rather than in capital preservation options that offer little chance of growth. In addition, truly “orphaned funds” with balances less than $1,000 will be transferred to Treasury securities, including in the myRA format, “so that balances earn a positive return.” 

Text of the proposal shows the underlying mechanism of the lost and found would allow those who believe they own a missing account to view contact information for the plan administrator currently overseeing the DC plan in question.

AARP and the Pension Rights Center have both voiced support for the proposal, according to the senators. The full text of the bill is here

«