PLANSPONSOR - September - October 2023 - 33

what to do with their balance, or there
might be a lot of people rolling money
out of the plan. "
Different Plan, Different Goals
The population of the plan will also affect
engagement campaigns, says Jana Steele,
a senior vice president and defined contribution
consultant at Callan in Chicago.
Manufacturing or retail participants typically
have different educational needs and
retirement goals than do high-earning
participants in white-collar fields such as
finance, medicine or law, she says.
" Plan sponsors should think about
what's important to their business and
organizational goals, " says Scott Lind,
senior vice president and head of digital
experience
at Ascensus
in Dresher,
Pennsylvania. " Then consider how plan
design can support those goals. "
Once a plan sponsor identifies
specific populations with engagement
challenges, it can determine what types
of plan design changes could help those
groups save more.
" There are many levers that plan
sponsors can pull to increase engagement,
but what really sits at the top is
personalization, and leveraging the data
and the insights to make the experience
as personal as it can be, " says Joleen
Workman, vice president of customer
care at Principal Financial Group in Des
Moines, Iowa.
This year, plans whose participants,
due to COVID-19, dipped into
their savings under the Coronavirus Aid,
Relief and Economic Security Act might
lean into messaging to
remind those
participants that the repayment date for
such distributions is closing, Steele says.
" Repayment levels have been low, "
she adds. " Folks have just not been really
proactive about repaying those distributions,
so, in that case, plan sponsors
might want to communicate, 'Hey,
you took a distribution, and that had
an impact on your projected retirement
picture. Let's talk about that and the ways
you can improve it. "
" There are many levers that plan
sponsors can pull to increase
engagement, but what really sits
at the top is personalization ... "
Increasing Contribution Rates
Plan sponsors without automatic escalation
might consider whether it makes sense
to change the plan design to include it or
hike the default deferral rate at enrollment.
If neither is right for the plan, they might
focus on messaging about the importance
of increasing contributions, as well as on
best practices they can follow, such as
timing the increases to when a pay raise is
given, to lessen the impact.
" Many employers started automatic
enrollment at 3%, and then inertia kicked
in, and participants wouldn't change it,
and they ended up saving less than what
they would normally save, " Workman
says. " So we're working with plan sponsors
to make sure their automatic enrollment
levels are appropriate. That might
be auto-enrolling at 6% and then autoescalating
every year to 10%, or 15% to
truly leverage that inertia. "
Another important goal for plan sponsors
to consider as they look ahead to 2024
is to prompt participants to update their
account beneficiary. One downside of automatic
enrollment, Noorani says, is that
some participants who are automatically
enrolled in the plan never log into their
account and, therefore, never get prompted
to name or update their beneficiary.
As enrollment has gone up, beneficiary
naming rates have gone down
about 500% nationwide, Noorani says, so
connecting with participants about the
importance of designating a beneficiary
can be an important way to engage them.
Some sponsors' goals will have
to reflect changes to plan design
required by the SECURE-for Setting
Every Community Up for Retirement
Enhancement-2.0 Act. Next year, catchup
contributions made by participants
earning more than $145,000 will need to
go into a Roth 401(k); plans that want to
allow catch-up contributions but that lack
a Roth option will have to introduce one.
That creates an opportunity for sponsors
to engage participants about how
Roths work and the benefits those plans
can provide in retirement.
" Having a Roth option is now the
norm as opposed to the exception, "
Noorani says. " [Yet,] a lot of employees
still have misconceptions about Roths,
and highly compensated people don't
know that they're eligible to save in them. "
Financial Wellness
Remains a Focus
When it comes to plan engagement,
financial wellness offerings remain a top
priority for many plan sponsors. Nearly
seven in 10 employers now supply some
financial wellness program, with more
than nine in 10 saying their financial
wellness offerings reflect an organizational
philosophy to support employees,
according to the Callan 2023 Defined
Contribution Trends Survey.
Plan
sponsors
are considering
how best to provide advice or financial
coaching-or other benefits that support
retirement-that is unbiased, to help
" people who aren't confident about the
choices they may be facing, " Yost says.
" That has been a really popular feature
for plan sponsors who are looking for a
way to offer services like that. "
Plan sponsors that have had substantial
turnover might also consider targeted
communications aimed at helping
employees understand their options for
their accounts if they leave their job.
" Employees might need information
about the pros and cons of leaving [their
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