Using Plan Design to Improve Participant Outcomes

Plan sponsors should review their current plan design features and consider how they drive participant behavior. Studies have shown that participants will often choose deferral rates at a level to obtain the maximum employer match. By stretching out the matching formula, the employer cost stays the same but the employee is encouraged to save more. For example, a plan that matches 100% on the first 5% could move to a 50% match on the first 10% of salary. The employer cost remains constant at 5% while at the same time employees are motivated to contribute up to the 10% level.

It is important to limit participants’ ability to use the money for something other than its intended purpose: retirement. Plan sponsors should consider limiting, if not eliminating, loan availability within their plans. Participants rarely understand the true impact of taking a loan from their account—“borrowing from themselves” is a common justification employees use. Although the current economic environment may not be the best time to eliminate loans, it should be something to consider for the future.

Read Improving Participant Outcomes: An Action Plan for Plan Sponsors and start developing your action plan to improve participant outcomes. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

What's Driving the Recent Stock Market Volatility?

January 2016 was a particularly difficult month for equity investors, with the major U.S. equity indices in correction territory. China's economic slowdown and negative earnings in the energy sector are the most commonly cited factors for the possibility of a global economic slowdown.

This paper, What's Driving the Recent Stock Market Volatility?, provides retirement plan fiduciaries and investors insight into the stock market volatility, including:

• the role of China and the energy sector as market drivers; 
• "dashboard" metrics showing where equity investors should focus their attention in 2016; 
• an analysis of the long-term relationship between corporate earnings trends and S&P 500 Index performance; and 
• an overview of the price/earnings (P/E) ratio and how much investors are willing to pay for those earnings. 

If you have any questions about this paper, or would like to begin talking to a trusted advisor, then please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Participant Outcomes vs. Participation Rates: How to Succeed in Both Areas

Until recently, participant outcomes were not a great concern to most plan sponsors; even now, a relatively few number of plan sponsors use income replacement as a measure of plan success. A recent survey conducted by PLANSPONSOR magazine showed just 3.5% of plan sponsors use projected retirement income as a metric to assess their plans.1 Instead, the goal was to offer a plan with good investment choices, competitive fees, and a recordkeeping platform that would minimize the administrative burden on the employer.

Establishing a High Performing Investment Committee for Corporate Retirement Plans

Survey participants’ responses in our Retirement Survey Report varied widely as to how often their investment committee met to discuss different kinds of retirement plans. However, most participants generally met on a quarterly basis, particularly so with regard to 401(a) profit sharing plans (78%), 401(a) money purchase plans (75%), and Employee Retirement Income Security Act (ERISA) 403(b) plans (59%). By contrast, 29% met semiannually to discuss 401(k) plans—versus 57% who met quarterly—with an additional 26% meeting semi-annually to address issues related to ERISA 403(b) plans.

Best Practices for Setting Up An Investment Committee for Corporate Retirement Plans

In our 2014 Retirement Survey Report, about 79% of survey participants said they have an investment committee. Given a complex environment of regulatory scrutiny and fiduciary liability exposure, a committee specifically charged with investment oversight is a sound risk management strategy for plans and organizations of all types and sizes.

Although they will differ from one organization to the next, best practices suggest an investment committee’s responsibilities and duties include:

Reminder Dates for Retirement Plan Participant Notices

As we approach year end, now is the time to handle the distribution of annual participant notices as required by ERISA.

Strategic Benefit Services created this chart to remind plan administrators of the notices required for distribution, and their applicable deadlines.

Please call or email with questions about this Retirement Plan Participant Notices Chart, or for information on how Strategic Benefit Services can enhance your organization's retirement offering.

Q3 Retirement Market Recap

Stock investors experienced the first correction in nearly four years in August when the S&P 500 declined 12.5% from its recent high. So, what triggered this one?

Read the Q3 Retirement Market Recap to review the key market drivers for the third quarter financial performance. The SBS Retirement Market Recap provides a summary of market and economic events which have influenced the financial markets in the past quarter.

Should you have questions about this Market Recap, or for information on how Strategic Benefit Services can enhance your organization's retirement offering, please contact us by calling (855) 882-9177 or email us at sbs@hanys.org.