Can plan sponsors serve their retirees’ best interests? A new study suggests that they’re not interested in doing so.
Employees face a host of challenges as they move from the job into retirement—and, according to “The Current State of Retirement: A Compendium of Findings About American Retirees,” from the Transamerica Center for Retirement Studies, employers aren’t helping with those challenges.
That’s despite the fact that employers are becoming interested in retaining retirement plan assets from people who have left the job, to help keep plan costs down—and also despite the impending influence of the Department of Labor’s fiduciary rule, which is expected to have an impact on IRA rollovers.
The study asked retirees about the ways in which their employers helped them transition into retirement, and a surprising 63 percent indicated that their employers did nothing at all to help them. Just 9 percent said that employers provided any kind of financial counseling about retirement, while even fewer—only 8 percent—offered seminars and education about transitioning into retirement.
Although employers are increasingly offering financial wellness programs designed to help employees manage their finances better—and thus, perhaps, transition out of the workplace so that the employer can keep health care costs down by bringing in younger and likely healthier employees—the question arises whether employers can serve the best interests of their retirees.
An increase in retiring employees who choose to leave their assets in an employer’s plan rather than rolling them over doesn’t necessarily mean that the sponsor will have the best interest of those employees in mind—at least not without some changes in how assets are handled.
With just 9 percent of employers taking the initiative regarding retirees’ finances, perhaps they are not sufficiently interested in taking on the fiduciary interest required to satisfy the requirements of the DOL rule.
They’ve already proven their disinterest in helping employees gradually transition into retirement, or to have a “flexible” retirement—working reduced hours or at a job with lower responsibilities.
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