How plan sponsors can help plan participants protect their retirement savings

In many ways, it’s hard to fathom that we’ve been living with the COVID-19 pandemic for nearly a year – and on top of a tragic new illness that has impacted every corner of our society, a historic economic crisis has packed a one-two punch of devastation for millions of Americans – especially on Main Street, where small businesses and their employees have been hit particularly hard. Lost jobs, lost hours or wage cuts for workers or their spouses have endangered their ability to save for retirement and have put their financial security at risk. Financial stress also reduces worker productivity, and this can undoubtedly pose a challenge for many businesses that continue to struggle themselves.

With so much financial hardship to face in today’s world, plan sponsors must support their employees in their roles as savers and retirement plan participants now more than ever before.

Luckily, there are a number of strategies that sponsors can consider to help participants protect their retirement savings plans in the present and strengthen them for the future.

Be there beyond the benefits

It’s undeniable that the COVID-19 pandemic has had a wide-reaching impact on Americans’ ability to simply stay afloat – let alone keep a healthy savings pool.

A recent survey from Pew Research Center found that one-in-four adults have had trouble paying their bills since the coronavirus outbreak started, and about one-in-six have borrowed money from friends or family or gotten food from a food bank – so it comes as no surprise that the same survey found that one-third have dipped into savings or retirement accounts to make ends meet.

With these sobering statistics in mind, it has become more important than ever before for plan sponsors to consider the whole picture of their participants’ financial landscape in order to build a solid line of defense around their retirement savings.

A critical place to start is plan participant emergency savings. Sponsors should encourage employees who don’t have already have one of these back-up accounts to open one, and emphasize the importance of shoring up this pool as a part of the regular monthly budgeting process. By helping participants accumulate another, more easily accessible source of funding to tap into in times of need, sponsors can at least limit – if not, completely prevent – the breach of retirement accounts as a source of crisis cash.

Another useful tool is employer-sponsored financial wellness programs, which can help participants access more information about key financial planning issues like retirement income planning, tax strategies and insurance. These programs can also be structured to provide access to a financial advisor or financial planning assistance, which can be an important opportunity for many middle- and working-class employees for whom advisory services may be out of reach. By helping build financial literacy, sponsors can better equip participants to weigh financial risks during times of hardship and empower stronger financial planning for the long-term.

Review and reconstruct retirement plan offerings

There are also several plan offerings that sponsors can consider to help participants build their retirement savings and arm them against downturns down the line.

Sponsors should periodically conduct a thorough re-examination of the investment offerings in their retirement plans to see where enhancements can be made to help participants meet their goals.

Retirement is not a one-size-fits all endeavor, and offering individualized solutions like managed accounts, custom target date funds, or model portfolios can allow for a greater level of customization to better cater to each participants’ unique needs. Adding stable value and in-plan guaranteed income options can also provide participants with an important anchor to bolster portions of their savings against future market volatility as well.

While budget constraints and uncertainty may present some challenges, one of the best ways to support participants’ retirement savings efforts is to increase employer matching contributions – even a little bump can go a long way.

Participants may not only feel more compelled to contribute by the new match math in their favor, but it also helps show that sponsors care about their wellbeing and security beyond their time on the clock, which may also help with retention.

Partner with your plan service providers

At the end of the day, the road ahead will still be difficult for some. Although the vaccine will bring welcome relief to many, the race between the rollout, the continued spread of the virus and the ongoing economic challenges on Main Street means the near-term is still tenuous for many people’s financial security – so the time to act is now.

The good news is that plan sponsors and their participants are not alone in this fight. Consult with your financial advisor and plan provider to determine which options are the best fit for your organization. With their resources and expertise, you can create a holistic battle plan that can help employees better navigate the financial pressures they’re facing today – and help advance better retirement security for tomorrow.

Paul Swanson CFA, CIMA is Vice President, Retirement at Cuna Mutual Group, a leading insurance, financial services and technology company focused on helping people achieve financial security through all life stages.

CUNA Mutual Group and Cuna Mutual Group are marketing names for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries, and affiliates. 

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