PLANSPONSOR - February/March 2021 - 18

PLAN DESIGN | COVER STORY
INCREASING
PARTICIPANTS'
TRUST
Invite them to enroll and engage,
with these top plan features
DO YOUR EMPLOYEES know how great their retirement plan
is and how much work you put into making it so? Or would they
be swayed by bad press about plans being sued or by attorney
advertisements for discontented plan investors?
It is important that participants trust that their plan sponsor
has their best interests in mind.
Stress Your Plan Design
Natixis' 2019 Defined Contribution (DC) Survey found that,
across all generations, American employees said the main
reason they save in their company DC plan is the employer
match-cited by 56% of respondents.
These results are consistent with other years' surveys, says
Edward Farrington, head of retirement at Natixis in Boston. If
plan sponsors currently provide a match, Farrington suggests
increasing it. " That creates a tremendous amount of goodwill
with participants, " he says, pointing out that a 10% or higher
savings rate, supplemented by the company match and saved over
time can yield sufficient retirement income. The sponsor should
explain that it offers a match and " the power of it, " he says.
One in five (21%) respondents said they would go along
with automatic escalation to increase their deferral if their plan
provided for it. And 76% said they would be more inclined to save
if they could invest in the plan on day one of employment.
An upcoming means to attract new investors-especially
Millennials-is via strategies involving environmental, social
and governance (ESG) investment. Natixis found that seven in
10 Millennials said they would join their company DC plan or
increase their savings if they had access to responsible investments.
Farrington says, " There is evidence it could actually
[improve] behaviors without plan sponsors having to spend
more money on the plan. "
Getting Personal
Fifteen percent of employees surveyed by Natixis said getting
access to professional investment advice in their plan would
incentivize them to save more. Nearly two-thirds (64%) who
participate in a company-sponsored DC plan said they want
18 PLANSPONSOR.COM February - March 2021
their employer to explain it better.
More personalization encourages participants to engage
and take action in their plan, says Ben Lewis, senior managing
director overseeing institutional sales, consultant relations and
health care at TIAA in Boston.
To thus customize their plan, sponsors can offer oneon-one
advice and personalized projections on statements.
" Participants know they are saving for retirement but don't
know what they should be on track to save, " Lewis says. By
helping participants clarify that and providing " a path for
them to do so-the steps to achieving lifetime income-[the
sponsor] builds happiness with the plan, success for participants
and their trust in the plan sponsor. "
But personalization is also about " digging in and evaluating
how different employee segments are doing-by age, gender or
behavior such as contributing " less than the top match amount,
Lewis says. If participants neglect to optimize the match, it is
key to show them how doing so can improve lifetime income vs.
affect their paycheck today.
Emphasize the Process
Investment committees spend a tremendous amount of
time selecting and monitoring DC plan investment menus,
Farrington notes. " Maybe it's something plan sponsors could
communicate more: the rigor that goes into evaluating and
making sure costs are low, " he says. Sponsors should also
communicate the benefit of participating in the plan vs. buying
investments on the employee's own-the economies of scale
and the institutional pricing, for example. " I think that would be
greatly appreciated by plan participants and is probably undervalued
by them now, " he says.
Farrington adds that it is also important to remind participants
that when they see investment returns on their statements,
they are seeing performance that is net of fees. " It's good to know
what you are paying for investments, but you should also understand
that some that are more expensive may be performing well
enough to earn that fee and then some, " he says.
Sponsors typically do not share their processes for selecting
investments or making plan design decisions with participants,
Lewis says and observes that too much information can overwhelm
them. " Getting participants to engage is a challenge. "
For that reason, plan defaults can be helpful, he says, as
would a provision in the " SECURE [Setting Every Community
Up for Retirement Enhancement] Act 2.0, " which would make
automatic features mandatory for new plans.
" One thing we really worked with our plan sponsors on is
encouraging employees to engage with us for advice, whether
by phone, the web or face-to-face, " Lewis says. " They should
connect with us to ask questions. "
He says most participants will not ask to have fees explained,
but sponsors should make sure they highlight the different ways
participants can find information. -Rebecca Moore
http://www.PLANSPONSOR.COM
PLANSPONSOR - February/March 2021

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