4 steps plan sponsors can take to improve their DC plan inclusion & diversity

The pandemic has created an opportunity for plan sponsors to re-evaluate and re-imagine defined contribution plans for the post-pandemic period. One way that plan sponsors can move the needle with their plans is through inclusion and diversity, according to a report by Willis Towers Watson.

WTW’s 2020 survey of DC sponsors found that two-thirds of respondents were extending their organizations’ broad I&D efforts into the realm of the retirement savings plans they offer. Doing so, according to the report, can increase participation and ensure fairness of both benefits and potential retirement outcomes.

The report outlined four areas in which plan sponsors can refresh their DC plans to include I&D considerations. They include:

1. Target specific cohorts. Different participant cohorts have different abilities to save and accumulate assets to their plans, said WTW. “Sponsors can adapt their periodic reviews of benefits and their design, features and communication to ensure that all groups are presented with, and taking the best advantage of, the participation and savings opportunities the plan offers, and the achievements of those groups at various career stages.”
2. Evaluate committee composition. At the plan level, I&D can be approached by reassessing committee makeup to ensure that diverse groups are represented at the policy-making table, said WTW. The diversity of committee members’ backgrounds can also be assessed.
3. Extend assessments of diversity to third-party providers. WTW noted that plan sponsors should look outside the plan to ensure diverse representation as well, including among asset managers. “The cultures and diversity of investment firms have become areas of focus for institutional investors and consultants, and accordingly, we have devised a 25-factor system for scoring investment firms on the ethnic and gender diversity of investment teams.”
4. Take an inclusive approach. Plan sponsors should start by assessing the current financial state of plan participants to identify the diverse needs of their workforce. “Boosting the financial wellbeing of plan participants can drive improvement of plan outcomes and allow all demographic groups to better understand and engage with the benefits being offered to them.”

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.

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