How does your retirement plan stack up?
Plan sponsors all work hard to make sure that our retirement programs are a valued benefit. As fiduciaries, we are charged to make sure that the fees paid and services provided to these programs are reasonable. In fulfilling those objectives, most conduct some kind of periodic review of plan features and program fees, as well as comparing things such as matching contribution rates to those of comparable firms in terms of location, workforce demographics, or plan size. These days, a growing number of plan sponsors are evaluating success by taking into account “outcomes”: What is your participation rate? Are people saving enough? Are their portfolios appropriately diversified and rebalanced on a regular basis?
All of those measures likely come into play as you explain your program to new hires as well as existing plan participants. After all, if you have taken the time and energy to develop a top-notch program, you are entitled to make sure that others appreciate your hard work. That said, the most critical evaluation element for your program may well be its success in helping your workers achieve a financially secure retirement—and, in my experience, that frequently is a function of how easy you make it for workers to do the right thing when it comes to retirement savings.
This month’s Know How attempts to help participants focus on those important, but frequently glossed over, distinctions. I hope it gives them a better appreciation for the structures you have put in place—or, if you have not yet taken the opportunity to put some of those structures in place, that this month you will be inspired to do so.
As always, I look forward to your comments and feedback!
Nevin E. Adams