PLANSPONSOR - March - April 2023 - 22

30TH ANNIVERSARY | PARTICIPANTS
Education and Technology
As participants came to embrace the new
accounts, they also began funneling more money
into them. That trend got a boost from the
Economic Growth and Tax Relief Reconciliation
Act of 2001, which raised the level of allowable
contributions and instituted catch-up provisions
for savers over age 50.
The development of digital tools such as
retirement calculators that allow participants
to enter their own data and outside information
has made it easier for them to get a more
holistic view of their own financial situation, says
Richard Tatum, president of retirement services
at Vestwell in New York City.
" Technology has brought these savings
programs close to the participant and made them
more accessible, " Tatum says. " And education,
coupled with technology, is helping them make
smarter decisions for their retirement journey. "
But the type of education offered has also
changed significantly. Over these years, companies
have shifted from broad educational initiatives
to focus more on financial wellness, offering
tools and services that are customizable to meet
individual participant needs.
" We leverage data to drive personalized
advice, rather than general investment information, "
says Lynda Abend, head of strategy and
transformation for John Hancock Retirement in
Boston. " That's critical, not only to drive better
THE PPA AND
THE PARTICIPANT
EXPERIENCE
ARGUABLY, the Pension Protection Act, which passed in 2006, was the
legislation with the biggest impact on the participant experience in the past
30 years. " It's hard to overstate just how important the Pension Protection Act
was to individuals' retirement, " says Rob Austin, director of research at Alight
Solutions in Cornelius, North Carolina.
Among its provisions, the PPA made the following a permanent part of the
workplace retirement plan:
* Automatic enrollment
* Automatic escalation
* Qualified default investment alternatives
* Catch-up contributions
* Roth 401(k)s
" From a participant perspective, the PPA made it easy for workers who were
not investment savvy to start saving for retirement, " Austin says. " They now had
an opportunity to save and to get into an investment that's more professionally
designed. "
Austin notes that the more recent Setting Every Community Up for Retirement
Enhancement Act and SECURE 2.0 built on the foundation set down by the
2006 legislation. For example, provisions in SECURE 2.0 update some requirements
for auto-enrollment and -escalation and expand access to Roths and
catch-up contributions.
" It doesn't take a lot of detective work to see the fingerprints of the PPA all
over SECURE, " he says. -BB
outcomes, but also to get [participants] comfortable with saving
and with the path they're on. "
Third-Party Advice
The introduction of digital tools and advice also gave more participants
access to the information they needed.
" As things became more digital, we could think about how
we could scale this and make something available for everybody,
but also include a human element, " says Nancy DeRusso, head
of financial wellness at Goldman Sachs Ayco Personal Financial
Management in Irvine, California. " People want to do research
on their own, but, when they make key critical decisions, they
also want validation and confirmation. They want to be able to
talk to someone. "
The leeway to offer third-party advice-digital or not-
added a whole new dimension to retirement saving after the
Department of Labor endorsed such an arrangement in an advisory
opinion to SunAmerica, in 2001.
" Allowing third parties who have obviously credentialed
22 PLANSPONSOR.COM March - April 2023
experience and the expertise to offer participants that advice has
helped participants manage their path to savings, " Tatum says.
Ongoing education has also helped participants feel more
comfortable leaving their money in their 401(k) even during times
of extreme market volatility. According to the Investment Company
Institute, in the financial crisis of 2008 through 2009, only 3.7%
of participants stopped contributing to their plan, and during the
market volatility in 2021, just 1.1% stopped contributing.
Connecting Health and Wealth
Over the years, the industry has recognized the connection
between employees' financial health and their physical and
mental well-being and has applied that holistic perspective to
employee benefits.
" There's a greater connection between health and wealth, "
says Suzanne Ricklin, vice president of retirement solutions and
retention at Nationwide Financial in Baltimore. " That's positive
for the industry as a whole, and we have the opportunity to
connect those dots for participants and offer tools and solutions
http://www.PLANSPONSOR.COM
PLANSPONSOR - March - April 2023

Table of Contents for the Digital Edition of PLANSPONSOR - March - April 2023
