A Time for Education and Exchanging Ideas

This year’s PLANSPONSOR National Conference was very successful in addressing issues with which plan sponsors may be struggling, educating about trends to help some catch up to their peers and improve participant outcomes, and providing forward-thinking ideas to present to retirement plan committees.

In a CEO Roundtable, Peter Gordon, CEO of John Hancock Retirement Plan Services, Joe Ready, executive vice president of Wells Fargo Institutional Retirement and Trust, and Eric Wietsma, senior vice president, retirement services sales and worksite education for MassMutual Retirement Services, urged plan sponsors to consider financial obligations participants have that compete with retirement savings—student loan debt, caring for aging parents or saving to pay for children’s college education.  Wietsma emphasized the importance of financial wellness for participants. Employers must keep in mind that if employees work longer, the company may face real financial issues such as increased health care costs, disability claims and workers’ compensation.

In addition, the next big challenge will be the near retirees and the products and services they need now. There are several retirement income products on the market, but plan sponsors are hesitant to pull the trigger. Ready said keeping money in the employer plan is good for retirement plan participants.

Weitsma also pondered whether there will be a convergence of benefits, saying employers may not in the future be able to continue to pay for health benefits, and retirement plans are in the middle of this dilemma. “We may not be far away from a time when employees receive a pot of money and they can sort out the benefits they need,” he said.

In another panel about the intersection of health care and retirement, John Carnevale, president and CEO of Sentinel Benefit and Financial Group, noted that plan sponsors spend a great amount on health care and less on retirement benefits, but suggested that should be reversed. Not only would that boost retirement savings, but if participants were responsible for more of their health care costs, he argued, they would be more inclined to shop around for affordable solutions, and become more conscientious health care consumers.

NEXT: Plan sponsors share with their peers

Brian Coleman, director of benefits, compensation, payroll and HRIS at Dawn Foods, a Plan Sponsor of the Year winner, noted that his company has seen a 5% reduction in participant loans in its retirement plan since adding support products for health benefits—especially telemedicine and discounts for hearing, vision and pharmacy expenses.

Other plan sponsors shared with their peers what makes their plans successful. A winner of the inaugural PLANSPONSOR “Best in Class” designation Jeanette Wickoren, senior retirement analyst, Land O’Lakes, Inc., says the company’s recordkeeper does a retirement readiness study every third year, and the company has seen improvement over the last two studies. “We’ve added advice through Financial Engines, and we’ve added HelloWallet as part of a wellness plan, but,” she says, “I think it’s the automatic features we use that do the most.”

“Best in Class” winner Matthew Adamson, senior business leader at MasterCard, added that targeted communications to different populations of participants and the use of different types of media to communicate with participants has driven engagement and helped with his plan’s success.

In another discussion, Plan Sponsor of the Year winner, Kit Brady, vice president of human resources (HR), education and guest experience, Gillette Children’s Specialty Healthcare, recounted how her plan altered its match formula, simplified the investment lineup and re-enrolled all participants into a target-date fund (TDF) at the new default deferral rate. Since these changes were implemented, plan assets increased 27% and participation rose 17%. She also recommended having a well-developed participant communication strategy—especially targeted communications—to inform individuals what they need for retirement.

Tim Atkinson, chair, City of Austin Deferred Compensation and Austin Police Pension, is unable to automatically enroll or re-enroll participants into the plan. Instead, the city of Austin asks individual employees to speak to their peers about how the plan has benefited them—and rewards them with a bonus day off work. Participation in the 457 plan has seen a major increase since that initiative began.

NEXT: It’s not just about plan design

Plan design is not the only thing plan sponsors have to worry about; there has been an increased focus on fees. In one discussion, Barbara Best, principal at Capital Strategies Investment Group LLC, said that customized and thoughtful plan fee benchmarking leads to greater understanding of plan operations and plan success—and that choosing the wrong resources for fee benchmarking can actually decrease understanding of whether a plan is getting a good value for administration and investment services. 

Depending on the complexity of a plan, Dan Peluse, director of corporate plan services at Wintrust Wealth Management, suggested conducting a full request for proposal (RFP) to get a pulse on how current fees align with what may be available in the plan services marketplace.

Discussing defined benefit (DB) plan investing, another set of panelists noted that liability-driven investing (LDI) is still the game for many defined benefit plans, but equity investments can still play a role.

Retirement plan participant education is moving from away from discussing retirement plan basics and asset allocation to the value of saving, the importance of starting early and financial wellness. Michelle Barrett, manager of University Retirement Programs at the University of Rochester, a 2015 Plan Sponsor of the Year finalist in the 403(b) category, shared how the university uses gaming to get participants involved in learning. Panelists also discussed how plan sponsors can develop their message, use targeted messaging and measure results.

In the regulatory environment, Marcia Wagner, the president and founder of Wagner Law Group, and David Levine, principal of Groom Law Group Chartered, told conference attendees lifetime income, service provider process changes and privacy of retirement plan information are just a few things for which plan sponsors need to prepare.

NEXT: Plan sponsors’ role in reversing the retirement crisis

Plan sponsors attending the PLANSPONSOR National Conference were reminded of the important role they play in solving the retirement crisis in America. Age Wave Co-Founder Maddy Dychtwald invited retirement plan sponsors to act as guides and leaders for the new retirement landscape.

As Americans are living longer, plan sponsors can help them have a successful retirement by considering plan decumulation strategies and products. With DB plans “flat lining” and the first major wave of Baby Boomers retiring, the industry overall needs to figure out how to help defined contribution (DC) participants go through the transition from a salary to the decumulation phase of their retirement savings, says Shale W. Latter, retirement plan consultant for CapTrust Advisors.

Brock Johnson, president of retirement solutions for Morningstar Inc., asked plan sponsors attending the conference how willing they are to embrace change and innovation to fend off the retirement savings crisis. He outlined five nearer-term steps to help avert the crisis: Align plan design with core objectives, bolster savings, personalize plans and communications, redefine success metrics, and re-brand the value of retirement.

If you want to see more insights from the 2015 PLANSPONSOR National Conference, go to www.plansponsor.com and search for PSNC.

PLANSPONSOR is preparing for another successful conference, and in 2016, it will be at the Renaissance Hotel in Washington, D.C. More information is here.