SECURE 2.0 is all good with plan sponsors, but many still need guidance

The response among plan sponsors to SECURE 2.0 has been relatively positive, with more than 80% saying they think provisions of the act will help employees save for retirement. However, many plan sponsors still have questions about how SECURE 2.0 will impact their business and are looking for advice about how to adapt to changes, according to the UBS Workplace Voice online survey of employee benefits, SECURE 2.0 today.

Plan sponsors expressed concerns about needing additional resources to help manage retirement plans, their ability to adapt current plans to the legislation and its impact on company profits, the study found. Larger plan sponsors were more likely to have a strategy in place for implementing SECURE 2.0 than their smaller counterparts, but there is still some confusion among plan sponsors of all sizes about available tax credits to cover administrative costs as well as which provisions are optional and which are mandatory.

“With 90-plus provisions, SECURE 2.0 is a complex piece of legislation, but it’s essential to close the retirement savings gap and avoid a bigger crisis,” said Mike Griffin, head of distribution and institutional client engagement at UBS Workplace Wealth Solutions. “Retirement plan sponsors understand the urgency of addressing the retirement crisis, which is why more than half of them (56%) are looking to change their retirement plan consultant or financial advisor. They are looking for someone who can help them decipher and implement the SECURE 2.0 provisions while also educating employees on these critical financial matters.”

SECURE 2.0 has had a positive impact on many employers currently not offering retirement savings plans to their employees, the report found. More than half (56%) are now more likely to offer this benefit to help employees save more effectively for retirement, attract and retain talent, and contribute to their own retirement.

The provisions viewed most positively by plan sponsors in terms of their ability to impact retirement savings are increased catch-up contribution limits, automatic enrollment requirement, long-term part-time employee eligibility, emergency withdrawals, in-plan emergency savings accounts and student loan matches.

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The positive impact SECURE 2.0 will have on savers will also depend on plan sponsors engaging with employees to take advantage of some of the provisions.

“SECURE 2.0 implementation will largely happen between employers, their recordkeepers, and retirement financial advisors or consultants,” said Griffin. “Employers can then partner with their retirement plan consultant or financial advisor to educate employees not only on retirement savings but also financial wellness in general to help them understand their bigger financial picture.”