Automatic plan features can have an enormous impact on workers’ retirement income and can significantly boost participants’ chances of meeting retirement goals. But their success depends on how plan sponsors implement these features within their DC plan.
J.P. Morgan Asset Management, “Searching for Direction on the Journey to Retirement”, 2013
Plan Design assessment is the first step toward improving Plan Health. Making design decisions requires a strategic assessment of employee behavior and budgetary concerns. Thoughtful and purposeful decisions lead to the development of a robust chassis on which all other plan aspects can run.
|Challenge||Plan Design Solution||Benefit|
|Poor Participation||“E-Z Enroll”||Improved Participation|
|Low Deferral Rates||“Stretch Match”||Better Match Utilization|
|Stagnant Deferral Rates||“Step Up”||Ongoing Savings Improvement|
|Insufficient Overall Savings||“Simple 10”||Increased Overall Savings|
The implementation of some or all of these solutions increases participation, provides greater incentive for participants to save at higher rates, and simply makes saving easier. Those positive impacts lead to greater plan growth, which creates cost efficiencies in better vendor pricing.