PLANSPONSOR - July - August 2023 - 37

we now think of as financial wellness benefits-e.g.,
emergency savings
accounts
or student loan repayment programs-
resulted from company surveys. " We
started seeing these programs at large
companies as a result of listening tours,
and now there's language about them in
SECURE [Setting Every Community Up
for Retirement Enhancement] 2.0. "
Finding the Right Mix
Once the need to make a design change
has been identified, it is time to strategize
how. Reiskytl works with human resources
teams or plan sponsors directly at
this
stage, identifying their goals, building the
tools to achieve those and envisioning how
the plans will operate over the long term.
" There's always a risk of poor plan
design if you don't take the time to think
critically about guiding principles and
desired outcomes, " he says. Important is
understanding their existing cost
structure
including cash costs and accounting
costs-which are not always the same. He
also determines whether a plan is competitive
compared with peer companies' offerings
and, finally, risk. Risk considers longterm
liability potential as well as how
employees will be affected by a change.
" There are many questions that a
company might have to wrestle with in this
process-especially if they didn't when
the plan was created. But, once a sponsor
can articulate where it wants to land, then
we can move forward with designing the
appropriate solutions, " Reiskytl says. This
is also where any improvements in cost or
risk mitigation may become clearer, which
can be helpful for getting buy-in from both
management and plan participants.
Black agrees. He says he has worked
with sponsors that ostensibly have an
idea of what they want their retirement
plan to look like, but they are uncertain
how the plan works or unsure whom to
call with questions. If participants have
been moving in or out of the plan due to
employee turnover, management may be
surprised to learn that inactive participants
outnumber current ones. He often
" Often we'll ask our plan sponsors
if they're using the same cellphone
they were 10 years ago, and
of course they say no. Retirement
plans are similar. "
brings these issues up when assessing,
or later advising, a plan, which can help
advance needed changes.
" If you aren't thinking about your
eligibility criteria or your plan design
when you start, the costs can really add up
over time because you're on the hook for
the accounts of people who left, or you're
paying for services no longer relevant to
the business, " Black explains. " But plan
sponsors have to engage on these issues
if they're going to reap the benefits of
making changes to the plan design. "
A Community Approach
Many companies and public sector organizations
do listening tours or company
surveys, including asking questions about
retirement offerings.
If managers pay
attention to the feedback, they may find a
route to improvement already spelled out.
Dan Doonan, executive director of
the National Institute on Retirement
Security, notes that how organizations
approach making changes has a
significant impact. When Maine Public
Employees Retirement System opted to
make changes to its benefit plan in 2022,
it brought together participants, policymakers
and trustees to consider a variety
of scenarios and determine what they
wanted the pensions to be like.
As a result of those discussions,
MainePERS increased its cost of living
adjustment; added to the pension base to
ensure long-term viability of the benefit;
and tax exempted a bigger portion of
pension income so it would match the
same level of benefit as someone drawing
Social Security. As not all MainePERS
participants pay
into Social Security
during their working years, these
changes made it so MainePERS participants
were not penalized.
Sponsors may also want to engage in
a listening tour within the C-suite itself.
Counsel and HR likely will know what plan
changes are needed, both from a voluntary
and compliance standpoint. Doing this
now could prove beneficial, as there are a
number of legislatively required changes
on the calendar for 2024 and 2025.
Anne Tyler, managing partner at
Atlanta's Hall Benefits Law, which focuses
specifically on benefits offerings and plan
design, notes that both SECURE 1.0 and
2.0 will require myriad plan changes,
starting next year.
" We're at a bit of an inflection point
with recent legislative changes and plan
design, " Tyler says. " Sponsors will need to
be able to accommodate these new rules,
and, if they can't, they may have to change
services providers, or risk running into
compliance issues starting in 2024. Now
is likely a good time for sponsors to evaluate
their plans with counsel and other
stakeholders to make sure the plans they
offer meet current criteria. There are some
positives in this too: Adding on some of
the benefits such as a student loan match
could improve their competitiveness. "
Copeland notes, " Seeing some of
these benefits crop up in the SECURE Act
language is notable, " he says. " I think we're
in a period now where everyone is going to
be getting comfortable with the new rules
and with what these programs do. It's likely
we could see some additional evolution in
this area. Sponsors will want to keep an eye
on that as they continue to evaluate their
plan designs. " -Bailey McCann
PLANSPONSOR.COM July - August 2023 37
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