Improving employee retirement plan experience

From changing the eligibility date to implementing financial wellness programs, here are trends one advisor sees.

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The COVID pandemic has disrupted practically everything — including the retirement plan space, though in many cases for the better. Michael Ingram, a partner and wealth advisor at Octavia Wealth Advisors LLC in San Diego, shares how employers are adapting to the latest trends and best practices for improving the employee experience. Octavia is a wealth management firm that also manages retirement plans for companies.

Katie Kuehner-Hebert: What are the latest trends in the retirement plan space?

Michael Ingram: Now that the labor market is so tight, employers are choosing to change the eligibility date for new hires to enroll in their company’s retirement plan to better attract employees.

Michael Ingram, Octavia Wealth Advisors

Before, the eligibility date would be one year or six months after hire, but now a number of employers are reducing it to three months, or even immediate. This is purely due to the pandemic. Many people enjoyed working from home, and when their employer told them it was time to come back to the office, many boomers likely just decided to retire early, creating an even greater demand for workers.

Another trend I’m seeing in the marketplace are employers wanting to implement financial wellness programs for their employees — budgeting, debt management, life insurance, and even how financial stress can impact a person’s health. That’s the number one cause of stress in the workplace, so if employers can help relieve stress, they can make people much more productive employees. The financial wellness programs are pretty holistic.

Recordkeepers like Transamerica offer financial wellness programs through their platform, but it’s really up to the financial advisor of the company’s retirement plan to encourage workers to use the tools. There are also third-party apps like Well Cents that employers can implement with their workforce to help improve engagement.

Another trend is specific to California — next June, employers with more than five workers have to set up a retirement plan or enroll employees in a state plan, or pay a fine.

What is your advice on how plan sponsors should best connect with employees?

In addition to offering financial wellness programs, employers should also offer ongoing educational seminars after the enrollment period. I’ve conducted a number of employee seminars on behalf of clients, discussing topics like Social Security, Medicare, college planning, life insurance, cryptocurrency and other alternative investments.

Some employers like that, and some employers don’t. They don’t want to take time away from employees working, and some don’t want to encourage everyone to be in their retirement plan, because they don’t want to match contributions. But the employers that like it have more foresight, because they see it as part of financial wellness that can also help their bottom line.

How can plan sponsors improve the enrollment process for employees?

One way to improve the process is to implement auto-enroll. At the outset, employees auto-enroll at a certain percentage, then an advisor contacts them to see if they would rather elect to have a more or less aggressive percentage. They may also choose to open a tax-free ROTH IRA. Many people would rather set it and forget it, but employers can encourage their workers to take a much more active role in their retirement plans.

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