PLANSPONSOR - June/July 2020 - 17

Don't Forget Non-Participants
DURING this tumultuous time, it is especially
important for plan sponsors to aim
communications not only at their plan
participants but also at non-participants.
As more employers have implemented
automatic enrollment, some eligible
non-participants may be opting out due
to pressing financial needs that preclude
retirement saving. Yet, they may be just
as receptive to communications on such
topics as their peers who do save.
" The people who aren't able to participate
in the retirement plan are probably
the people who need the most help with
financial wellness, " says Kathleen Dulko,
a Certified Public Accountant (CPA) and
Certified Plan Fiduciary Advisor (CPFA)
with Ashford Investment Advisors in
Daytona Beach, Florida.
Dulko suggests that communications
to these employees have an empathetic
tone-even if employees have not lost
their job, they may have family members
who have, or have longstanding financial
problems the economic shocks have
exacerbated. Acknowledge that these are
challenging times, and point them to any
education or tools that might help.
" The tone has to be right, because
people are still struggling " says Lori
Lucas, CEO and president of the Employee
Benefit Research Institute (EBRI) in
Washington, D.C. " If they're trying to
make ends meet and you're talking about
long-term savings goals, it may fall on
deaf ears. Maybe the initial conversation
saying they will do so, up from 83% at the same time last year.
As the pandemic continues, plan sponsors may want to renew
conversations with their adviser and recordkeeper about which
capital growth products might make sense for plan participants.
The Setting Every Community Up for Retirement
Enhancement (SECURE) Act eased the way for employers to offer
guaranteed income products within their plan. Employees may
be even more receptive to such vehicles now, as recent market
volatility has renewed fears of outliving their savings.
" The SECURE Act created an additional safe harbor and
transparency for plan sponsors, " Stevenson says. " This could be
a moment when some of the criticism of annuities goes away,
because they would have taken a lot of risk off the table for a lot
of people. There is a lot of innovation that's going to happen over
the next year with new products coming to market. "
Consider Student Loan Benefits. The Coronavirus
Aid, Relief and Economic Security (CARES) Act expanded the tax
break available under Internal Revenue Code (IRC) Section 127
for sponsors to help workers repay their student loans. Employers
offering a Section 127 educational assistance program may pay
up to $5,250 toward an employee's loan without having to cite the
payments as being part of the person's income. Still, relatively
few companies have taken advantage of the provision. A poll by
the International Foundation on Employee Benefits found that,
of the 25% of responding employers with a Section 127 program,
just 10% were using the new provision, while another 13% were
considering doing so. (See " Debt Busters, " page 38.)
With the extra tax breaks at the end of the year, plan sponsors
may still want to contemplate how implementing this provision
or offering other benefits, such as access to education about loan
is about what they can do right now. "
Helping workers weather an immediate
financial criss may not only improve
their near-term financial security, but
potentially put them in a better position
to start contributing to the company plan.
" Recessions are cyclical, and this is
going to happen again, " Dulko says. " Now's
the time to talk to employees about 'What
hurt you the most, and what can you do to
address that before the next recession?' "
While every message does not have
to stress retirement saving, it can give an
opportunity for employees to join the plan.
" This is an easy way to increase engagement, "
Dulko says. " Every encounter with
a non-participant should include a call to
action to enroll. " -BB
consolidation and general debt management might work in relation
to broader financial planning and setting financial goals.
" The burden of student loans has a big impact on younger
employees' ability to get in early and start to save, " Rouse says.
Education might also be aimed at helping parents of highschool-
and college-age children teach their kids how to make
smart decisions as to how much to borrow for higher education.
More than half of parents surveyed by Country Financial last
year said they would be willing to go into debt-borrowing an
average of $31,000-to help their children avoid student loans.
Close the Retirement Gap. The pandemic has widened
the retirement gap among Americans, with women, part-time
employees and those who work for small businesses falling farther
behind. As sponsors begin bringing employees back to work, it is
important to ensure that communications discuss how to rebuild
from the financial shock people have experienced, Patterson says.
" Timing is everything when it comes to saving and preparing
for retirement, " he says. " The impact to many people who were
already disadvantaged was amplified due to COVID, especially if
they found themselves out of work. "
The SECURE Act also included provisions that may help
reduce that gap, extending retirement benefits to some parttime
workers starting next year and allowing for the creation
of pooled employer plans (PEPs). Those may allow smaller
employers to introduce a retirement plan for the first time
thanks to more competitive pricing and the promise of less
administrative responsibility, Rouse says.
Rouse adds, " Our studies have shown that PEPs alone won't
erase the coverage gap but they will make significant strides in
closing it. " -Beth Braverman
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