PLANSPONSOR - December 2022-February 2023 - 2

What We Don't Know
INSIGHTS
A
s we're all aware, retirement plan fiduciaries
are required to operate the employer plan solely
in the best interest of the participants. When I
started writing about retirement plans, about 20 years
ago, fiduciaries spent their time focusing on investments.
However, today, the investment lineup shares
attention with a variety of other plan elements, and the
phrase " participant outcomes " is the new benchmark.
For the purposes of this column, let's assume that participant outcomes means
the ability for participants to achieve their desired replacement rate and retire when,
and in the way, they desire. After a year with a really mixed economic bag, I think,
overall, people would agree that the average account balance in a defined contribution
plan is generally much lower than would be assumed necessary to support the
retiree. But is everyone really in such bad shape?
What fascinates me, despite our focus on these outcomes, is how few employers
really have a sense of how their employees will fare in retirement. And there's a
reason for that. This is shown by some of the data from the 2022 PLANSPONSOR
Participant Survey, which provided insight into how Americans who choose to
participate in their employer-sponsored 401(k) plan feel about that savings opportunity
in terms of their future financial security. In that survey, most of those saving
in their employer plan intend to draw retirement income from various sources, such
as other DC plans, a defined benefit plan, Social Security, inheritance, etc. Which
means that any review of a single DC plan likely isn't entirely useful for helping the
participant-or you, the plan sponsor-predict that employee's financial health.
I'm often reminded of how those in the industry try to reconcile high retirement
confidence levels in surveys with the meager average account balances that
recordkeepers report. In fact, we saw some of that dichotomy suggested in our own
participant data, where the vast majority want to retire early, or at least earlier than
we'd consider " normal retirement age, " and they are confident as to what they will
need. In fact, two-thirds of the DC plan participants surveyed have a retirement
savings goal, and as mentioned earlier, a diversified group of income sources.
As I see it, we don't know how any given retirement plan participant will fare. As
an industry, we have to do our best to ensure that people save for retirement when
they have access to a plan-and that we continue to offer plans, as this drives success;
additionally, fiduciaries should, of course, have participant best interest in mind
when making critical plan decisions. But perhaps it doesn't make sense to overly
focus on whether or not a particular participant will achieve a set replacement rate.
In 2023, I think we'll continue to see emphasis on emergency savings, education
in financial wellness and debt management, and other such tools. We'll see
more of a move toward the sharing of participant data by providers, to help create a
more accurate picture. I encourage you to work toward helping employees save as
much as possible and concentrate on your employer contributions and the tools you
offer employees. If you are cognizant that what you see is only one part of participants'
overall retirement savings, you can regard the replacement rates with a layer
of skepticism and feel confident you're doing your part to assist your employees
with this portion of their income portfolio. -Alison Cooke Mintzer, Publisher
2 PLANSPONSOR.COM December 2022 - February 2023
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PLANSPONSOR - December 2022-February 2023

Table of Contents for the Digital Edition of PLANSPONSOR - December 2022-February 2023

INSIGHTS
RULES & REGULATIONS
PARTICIPANT ANALYSIS
UPFRONT
Risk Protection
Benchmarking Beyond Fees
Exploring ESG Investing
In Case of Emergency
Employee-Owned
FIDUCIARY FORUM
INSIDE ANGLE
PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover1
PLANSPONSOR - December 2022-February 2023 - Cover2
PLANSPONSOR - December 2022-February 2023 - 1
PLANSPONSOR - December 2022-February 2023 - INSIGHTS
PLANSPONSOR - December 2022-February 2023 - 3
PLANSPONSOR - December 2022-February 2023 - RULES & REGULATIONS
PLANSPONSOR - December 2022-February 2023 - 5
PLANSPONSOR - December 2022-February 2023 - 6
PLANSPONSOR - December 2022-February 2023 - PARTICIPANT ANALYSIS
PLANSPONSOR - December 2022-February 2023 - UPFRONT
PLANSPONSOR - December 2022-February 2023 - 9
PLANSPONSOR - December 2022-February 2023 - 10
PLANSPONSOR - December 2022-February 2023 - 11
PLANSPONSOR - December 2022-February 2023 - 12
PLANSPONSOR - December 2022-February 2023 - 13
PLANSPONSOR - December 2022-February 2023 - Risk Protection
PLANSPONSOR - December 2022-February 2023 - 15
PLANSPONSOR - December 2022-February 2023 - 16
PLANSPONSOR - December 2022-February 2023 - 17
PLANSPONSOR - December 2022-February 2023 - Benchmarking Beyond Fees
PLANSPONSOR - December 2022-February 2023 - 19
PLANSPONSOR - December 2022-February 2023 - 20
PLANSPONSOR - December 2022-February 2023 - 21
PLANSPONSOR - December 2022-February 2023 - 22
PLANSPONSOR - December 2022-February 2023 - 23
PLANSPONSOR - December 2022-February 2023 - 24
PLANSPONSOR - December 2022-February 2023 - 25
PLANSPONSOR - December 2022-February 2023 - 26
PLANSPONSOR - December 2022-February 2023 - 27
PLANSPONSOR - December 2022-February 2023 - Exploring ESG Investing
PLANSPONSOR - December 2022-February 2023 - 29
PLANSPONSOR - December 2022-February 2023 - 30
PLANSPONSOR - December 2022-February 2023 - 31
PLANSPONSOR - December 2022-February 2023 - 32
PLANSPONSOR - December 2022-February 2023 - 33
PLANSPONSOR - December 2022-February 2023 - In Case of Emergency
PLANSPONSOR - December 2022-February 2023 - 35
PLANSPONSOR - December 2022-February 2023 - Employee-Owned
PLANSPONSOR - December 2022-February 2023 - 37
PLANSPONSOR - December 2022-February 2023 - FIDUCIARY FORUM
PLANSPONSOR - December 2022-February 2023 - INSIDE ANGLE
PLANSPONSOR - December 2022-February 2023 - PLAN PROFILE
PLANSPONSOR - December 2022-February 2023 - Cover3
PLANSPONSOR - December 2022-February 2023 - Cover4
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