The Principal Unveils Retirement Wellness Scores

The Principal says the personalized Retirement Wellness Score is one feature of a broad new participant digital experience it is bringing to retirement plan clients. As explained by the firm, the score represents the percentage of a participant’s pre-retirement income that they will likely be able to maintain in retirement, ranging from 0% to 100% or higher. The score is based on account balances; contribution levels in defined contribution, defined benefit and nonqualified plans; an estimate of income from Social Security; outside savings entered by the participant; and other assumptions and data.

“It’s important to begin the retirement-planning process with a goal in mind—a desired outcome,” explains Jerry Patterson, senior vice president of retirement and investor services at The Principal. “We believe the Retirement Wellness Score is a great place to begin. This one number, displayed front and center on every participant’s account home page, allows them to know in real time whether they’re on track for a secure retirement.”

The score is embedded in an intuitive color-coded display system that represents different ranges of income replacement. Participants with a score of 70% and above fit into the green group, while those with a 50% to 69% percent income replacement score are placed in the yellow category. The red group is for those with less than a 49% projected income replacement ratio. The Principal says the color-coding system helps motivate participants to take positive action to improve their retirement outlook.

Other features of the improved participant digital experience include expanded account management and educational resources and services. Mobile-friendly functionality and streamlined designs have also been introduced based on feedback from participants, plan sponsors, advisers and experts in behavioral finance and digital design. The new platform will be fully launched by the end of the year, according to The Principal.

Patterson says the digital enhancements are part of a new approach to workplace retirement readiness called Principal PlanWorks, a platform of capabilities and services designed to make retirement plans work better for both participants and plan sponsors through plan design, participant experience and strategic measures.