December 20, 2013 (PLANSPONSOR.com) – VALIC, a retirement plan provider for nonprofit institutions, released a plan fee equalization feature within its recordkeeping services.
The tool is designed to allow plan participants to
contribute equally to the operational cost of a workplace retirement plan,
according to a statement from the firm.
To equalize plan fees, VALIC calculates the cost of
administrative expenses for all plan participants. The firm then determines
each plan participant’s percentage of payment towards these expenses, based on
the amount of revenue provided by fund companies to cover the
cost of administration.
Participants whose funds have covered more than their share
of administrative costs will be issued a credit to their account, while
participants whose funds have not generated their share of costs will be
debited.
“Plan fee equalization ensures that all plan participants
bear equal responsibility for their plan’s administrative costs regardless of
their investment choices,” says Glenn Harris, executive vice president of
VALIC.
Harris adds that VALIC hopes the new tool will increase fee
transparency and enhance customer service for the plans it supports.
VALIC
manages plans for nearly 25,000 groups serving more than two million plan
participants. VALIC represents The Variable Annuity Life Insurance Company and
its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services
Company.
Helping Health Care Employees Achieve Retirement Readiness
December 20, 2013 (PLANSPONSOR.com) - To increase the effectiveness of an organization’s retirement plan offering and drive better retirement outcomes for plan participants, employers must first understand how their workers save for retirement.
This is
particularly true among health care organizations, as these workers exhibit
important differences from retirement plan participants in other industries
including varying degrees of financial literacy, higher ratio of female workers,
and around-the-clock schedules.
A study conducted
by Lincoln Financial Group[1]
examines the characteristics of health care plan participants and explores how
health care organizations can help these individuals save for retirement
through their employer-sponsored retirement plans.
Some of the key
findings of the study show:
·
Nearly
half of health care workers tend to seek input from a wide variety of sources,
but have a hard time making decisions such as whether to participate in a plan,
how much to defer and how to direct their investments.
·
Positive
life events and outlooks motivate health care participants, more so than participants
in other industries. Hope influences 93% of health care participants—specifically,
the hope of accumulating enough money by the time they retire. Positive life events,
such as the birth of a child, getting a raise or bonus, or positive stock
market conditions, tend to influence them to make positive changes to their
retirement plan savings.
·
Health
care workers tend to be more concerned than others about meeting basic
financial needs, which limits their ability—or perceived ability—to contribute
sufficiently to their plan. In fact, six in 10 workers are concerned about
being able to pay for day-to-day expenses, compared to 49% of employees in
other industries.
·
Health
care workers are more likely to seek information from financial advisers and
financial experts, but less likely to interact online or to collect information
from reading. When asked which of several options would motivate them to make
positive changes in their retirement savings plan, three in five health care
workers select a one-on-one, in-person meeting with a financial adviser as
their first or second choice. Another two in five select in-person meetings at
their workplace.
·
An
employer’s matching contribution policy motivates health care workers to save. These
workers tend to limit contributions and many do not save beyond their employer
match.
[1]
Lincoln Retirement Power® Participant Engagement Study, Lincoln Financial Group
2012
An Action Plan for Change
The characteristics
and savings behaviors of today’s health care workforce provide a unique
platform for plan sponsors to begin connecting with retirement plan
participants in a more meaningful way. There are a number of tactics that can
be used to incite change in retirement plan participation, and ultimately, sponsor
and participant satisfaction in their selected retirement plan.
·
In-person is key—make it available around-the-clock. When
it comes to retirement plan meetings with health care workers, timing is
critical. Plan sponsors should offer meetings during work hours—preferably in a
few different time slots. For example, midnight meetings for overnight shifts
or lunch and learns. Reaching employees in a convenient way will optimize
communications success. Make sure that senior management is present to
reinforce the importance of saving.
·
Optimize plan design. Plan features such as auto enrollment,
auto escalation and the company match can be key drivers of higher
participation rates, higher participant deferrals and higher levels of
participant contributions in general. Health care participants may be less
likely to contribute beyond their employer’s match. Creating custom
communications that will highlight the benefits of saving beyond this match and
taking part in any automatic plan features could help participants more fully
understand the benefits of contributing more to their plan.
·
Communicate with Optimism. Research shows positive messages that
speak to emotional needs, not just numbers, tend to have the greatest impact on
actions, leading in turn to more effective savings levels. A communications
program that goes well beyond facts and figures, and shows participants what
higher deferrals can help them achieve, is one that can succeed in helping
health care workers achieve their financial goals in retirement.
Some of the
same basic principles that support physical health also promote financial
health: a personal touch, automating good habits and taking small steps toward
big goals. By applying these principles, as well as some of these retirement plan
action steps, today’s employers can help health care workers become successful health
care retirees.
Garry Spence, head of Participant
Engagement, Retirement Plan Services, Lincoln Financial Group
Lincoln Financial Group is the
Marketing Name for Lincoln National Corporation and its affiliates.
NOTE: This feature is to provide general information only, does not
constitute legal advice, and cannot be used or substituted for legal or tax
advice.