Building a better retirement plan is a goal that's within easy reach of most employers.  We know from behavioral science that simple plan design changes can put inertia to work for employees.  Plan features — including automatic enrollment of at least six percent, automatic escalation of at least one percent and stretching the employer match with a formula that incents employees to defer at higher levels—help participants be more prepared for retirement.

First, though, you have to get the plan sponsor's buy-in. These steps can help.

Step 1: Explain the advantages

More effective retirement plans may help employers:

• Allow employees to retire with dignity. In a recent Brightwork Partners survey ths past September, employers said they want 100 percent of employees to retire with an adequate and secure income.
• Manage fiduciary risks. When employees fail to take accountability for their own retirement, it becomes more important for employers to proactively provide meaningful retirement benefits and avoid any perceived concerns relating to fiduciary responsibility.
• Control healthcare costs. Employees who can't afford to retire on time stay on the company health plan. As employees age, their healthcare costs tend to rise.
• Boost employee retention. Employees who are happy with their retirement plan may be more inclined to stay in their current job.  

Step 2: Show that the changes can work

Research proves that key plan design features work.

• The participation rate of employees who are automatically enrolled is 91%, according to compny stats.
• Nine out of 10 employees not saving for retirement would do so if they were automatically enrolled by the employer, says the 2013 EBRI Confidence Retirement Survey.
• Automatic features such as auto enrollment and auto escalation are cited by 60% of firms to be the most effective method to influence positive participant behavior, the survey also reported.
• Retirement plan participation rates increase dramatically — up to 70% — when plans use key design features.
• Employee participation rates increase as employers add more of the key features — automatic enrollment, automatic increases, online deferral changes or employer contribution. The Principal has found.

Step 3: Overcome common objections

Be prepared for these common objections.

• My employees can't make ends meet, so they can't afford to save now. If they can't make ends meet now when they have a steady paycheck, how will they make ends meet when they aren't getting a paycheck? Waiting to start saving will be even harder, because there will be less time for the savings to grow through compound earnings. And they always have the option to opt out.
• Most people will continue to work well into retirement. Will they be able to continue to do their job when they're 75? If not, where else can they get a job at that age?
• If they wanted to save, they would. It's their choice. Data suggests that's not really the case. At The Principal, for instance, we've found that only about nine percent of employees will opt out of automatic enrollment. Fear, inertia and confusion are some reasons people don't save for retirement. They avoid what they don't understand. Plan design can help counter their inertia.

Be an advocate for retirement security and exceed client expectations

Helping plan sponsors get more out of their investment in the retirement plan demonstrates your value as a trusted financial professional. Become known as an advocate for retirement security through plans that work.