One big change is the search by employers for employees who have dropped off the radar. (Photo: Shutterstock)
As the concern mounts over employee retirement preparedness (or lack thereof), and new regulations seek greater oversight, employers are taking a more active role in just how employees manage their funds, especially their retirement funds, as they navigate the benefits provided at work.
So says Alight Solutions in its 2019 Hot Topics in Retirement and Financial Wellbeing report, which finds that not only are bosses expanding access to financial wellness programs in an effort to get employees on the straight and narrow in saving for retirement, they're also hoping to find new ways to keep departing workers from taking their retirement funds with them.
In addition, they're doing more to seek out former participants now among the missing—especially at important milestones, such as normal retirement age or age 70½, when required minimum distributions must begin.
|Financial wellness
Financial wellness is a big deal, and growing bigger, says the report, pointing out that 64 percent of employers say it's gotten more important at their organization over the last two years and none say it's lessened in importance.
In fact, close to two thirds of employers say they're very likely this year to create or focus on workers' financial well-being beyond just confining their concern to retirement savings. This percentage has risen from 30 percent in 2014, including a 13-point increase from last year.
But among the retirement provisions they're considering in that category are measuring the competitive position of their retirement program (47 percent, up from 39 percent in 2018) and projecting the expected retirement income adequacy of the population (33 percent, up from 31 percent in 2018).
|Keeping funds in retirement plans
Then there's the rising interest in keeping employees who have left the company from taking their money out of the retirement plan.
Just 5 percent of employers would rather employees did so, while 33 percent would prefer to keep them in the plan.
That's a change from times past, when employers didn't want to have to deal with the funds from workers no longer employed by them—but the extra money provides economies of scale for those remaining, so viewpoints have changed.
|Defined benefit plans closing/freezing
Another trend, says the report, is that “[m]ore defined benefit plans are expected to close participation or freeze benefits in 2019.”
The percentage of active DB plans has been dropping steadily—five years ago, 52 percent of employers still had open DB plans—but as of the beginning of this year, that's fallen to 35 percent, with nearly 10 percent of plans expected to close or freeze this year.
|Searching for missing participants
One big change is the search by employers for employees who have dropped off the radar. As workers become more mobile and change jobs more frequently, it's become easier for them to lose contact with employers holding retirement funds in accounts they've left behind.
And it can get tough to track down an employer if it's merged or been acquired by another company (or even a series of companies). Some companies do better at keeping in touch with former employees, while others might need a little nudge.
Nevertheless, says the report, despite the fact that an annual search for missing participants is the most usual, “the majority of employers are searching more frequently than annually. More than one-quarter of employers are performing a search on a quarterly basis.”
READ MORE:
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
