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PLAN DESIGN | EDUCATION
Revisit 2020 Decisions
As employers take stock of their plan,
and participant decisions, Pappa says,
they should remind people who took a
coronavirus-related loan that they have
three years to repay it, starting in the
year they took the distribution. " This will
ease their tax burden, " she points out.
For employers that suspended or
stopped their match last year, to inform
participants that you are reinstating it is
a great positive message to couple with
their need to save, Woodburn says. " This
would be a great time to dangle that
carrot[-i.e., the match-]in front of
employees. "
During the pandemic, many recordkeepers
waived fees for loan initiations
and distributions, Woodburn notes.
" Now may be a good time for sponsors to
temporarily take on these administrative
costs, to help employees, " she suggests.
Encourage Action
Plan sponsors that have yet to adopt
automatic enrollment and/or escalation
of their workers' deferral rates should
consider these key plan design elements,
as well as re-enrollment, says Pete
Welsh, head of retirement services at
Millennium Trust in Indianapolis.
And, if an employer decides it is
going to auto-enroll employees, it needs
to set the default at a meaningful savings
rate-6% or higher, not the longaccepted
3% rate, Welsh says.
Employers need to remind
employees about the benefits available
to them and ensure that they know how
to find more information if needed, says
Charlie Nelson, CEO of retirement and
employee benefits at Voya in Windsor,
Connecticut. " Many individuals are not
fully aware of all of the benefits available
to them, particularly voluntary benefits
such as critical accident or hospital
indemnity insurance. These will give
them some financial protection in case
of an emergency. "
In line with that, many employees
and employers alike have a newfound
appreciation for having emergency
savings, as well as for replenishing
savings used during the pandemic,
Nelson says. In fact, he says, he expects
that more employers will establish automatic
emergency savings accounts alongside
retirement plans.
Workers could also especially gain
from a financial wellness program, says
Shane Bartling, senior director, retirement,
at Willis Towers Watson in Walnut
Creek, California. This is particularly true
for women and minorities, who are more
apt to work for small to midsize companies,
which have been the hardest hit during the
pandemic, Bartling notes. Workers are
hungering for advice from independent
financial counselors, he adds.
Regardless of how sponsors engage
their staff, Woodburn says, they should
make their messages appealing, and use
humor, even with topics like dollar-cost
averaging and volatility. -Lee Barney
Mobile App Usage Soars
RETIREMENT planning firms have seen a jump in mobile app activity since the
pandemic began. Americans often leveraged apps to fill " in-between " time-e.g., on
a train ride to work or in a doctor's waiting room-but, now, extended stay-at-home
orders and a shift to online communication have been multiplying usage-including
for financial service activities.
A 2020 J.D. Power study reported that 33% of participants it surveyed used their
wealth management firm's mobile app regularly during the pandemic last year.
Likewise, Charles Schwab noted that mobile participant logins rose 33% in 2020,
over 2019. Nathan Voris, managing director of strategy at Schwab in Richfield, Ohio,
links this growth to the burgeoning of online communication last year.
" People are asking for help, and they're doing that through the mobile web, " says
Voris. " Plus, an [employee benefits] app is an easier way for recordkeepers and plan
sponsors to engage with participants. "
The J.D. Power study found that, across all age demographics, Millennials were
the most likely to use mobile apps throughout last year. Forty-five percent said they
now use them frequently, whereas 30% of Generation X, 15% of Baby Boomers and
11% of " pre-Boomers " said the same.
Engagement differs greatly between mobile apps and emails/telecommunications-the
once longstanding tools of engagement. Whereas emails can be lengthy
and bulky, apps offer a siloed space that is both efficient and convenient. Depending
on the app, participants can change deferral amounts and investments, review benefits,
receive education and set up advice appointments, all on one platform. " In a time
where people are overloaded with information, an app has all of their data and can
be a totally different experience that meets their needs at that time, " notes Jennifer
Benz, senior vice president, communications practice leader at Segal Benz, a benefit
consulting firm in San Francisco.
The effectiveness of push technology makes the app option greatly outweigh
email or web-based communications, says Voris. A participant receives a push notification,
and, with the tap of an iPhone or Android-plus a little help from Face ID
or Touch ID-he can review his financial wellness plan and change his contribution,
right in the same app, Voris says.
" It's much easier to reach a client with a mobile app, [thanks to] push notifications, "
Voris says. " At times, it can be a four-minute transaction. " -Amanda Umpierrez
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