Plan Health Measurement
It is tempting to be pleased, even satisfied, if one’s own participation rate is a little above industry average, say 72 percent as compared to 70 percent. But being slightly above a figure that is widely considered by behavioralists to being woefully inadequate is nothing to be proud of.
Shlomo Benartzi, Save More Tomorrow: Practical Behavioral Finance Solutions to Improve 401(k) Plans, 2012.
Business owners constantly assess different facets of their operations in terms of their return on investment. Yet few plan sponsors carefully analyze retirement data to assess the effectiveness of plan design changes and education efforts. Running and investigating those numbers may very well be the key to improved plan participation and performance in the future.
|Plan Data Ignored||Plan Data Assessment||Improved Participation|
|Uncertain Impact on Participants||Employer “Gap Analysis”||Better Match Utilization|
|Vendor Pricing||Recurring Re-pricing||Ongoing Savings Improvement|
Why do you have your plan? Is it to compete in the marketplace? To attract new employees? To retain employees? To create loyalty? To increase productivity? Because you care about your employees’ future? Whatever the reason, a careful review of the return on investment from changes in plan design and education efforts is a key step toward ongoing improvement. Plan Health is not a short four-step process; it is an ongoing cycle requiring constant review and measurement of data, and the unwillingness to be satisfied with anything short of all employees being on track for a dignified retirement.