PLANSPONSOR - September/October 2024 - 9

plan could offer a 10% match of 6% of pay,
subject to a dollar cap of $6,000; here, the
$6,000 is not based on income but something
anyone in the plan could obtain.
David O'Meara, head of defined
contribution investment strategy at Willis
Towers Watson, says many employers now
recognize the inequity issue, and some are
replacing the match with nonelective contributions.
He has also seen others implement
a stretch match, possibly matching 100%
of the first few percentage points of deferrals
and 50% of the next two. Gagnon says
he expects that, to increase participation
and ensure that low-earners invest properly,
more plans will use re-enrollment and
rebalancing. Re-enrollment can, however,
have a down side, he says, in that, if participants
who can afford only small deferrals
are re-enrolled at 5%, for example, they
might get frustrated and abandon saving.
" [Many] employees still live paycheck
to paycheck, " he says. " I think rebalancing
their accounts [for their age] is a much
better approach. ... I think more companies
will look at rebalancing on a regular
basis, like every couple of years. "
Emergency Savings and More
Unum launched its emergency savings
program a year ago, letting participants
contribute up to $10,000 to an account for
unforeseen expenses. New employees are
automatically enrolled into the 401(k) at a
5% deferral rate; an additional 1%, posttax,
goes into their emergency account.
Gagnon says first-year employee turnover
rates for those auto-enrolled into the
program were almost 40% lower than turnover
rates for first-year employees autoenrolled
prior to the program. " They're
building
financial well-being;
they're
building some comfort level, " he notes.
Unum recently joined the Portability
Services Network, which, Gagnon
suggests, many other plans may do. Now
Unum automates rollovers into its plan
for people with under $7,000 in a former
employer's plan. " We think that will be
extremely attractive to our new hires. "
Gagnon says he plans to stay active in
the industry, by writing articles, speaking
and consulting. -Remy Samuels
TIDBITS
A Decades-Long Battle to
Repay Student Loans
Data show that middle-income workers age 55 and
up represent the highest proportion of all student loan
borrowers (43%). Workers age 55 - 64 expect to take an
average of nearly 11 years to repay their own student
loans, while workers 65 and up will need 3.5 years on
average to pay off their student debt.
Source: Schwartz Center for Economic Policy, The New School, " How Student Debt Impedes Retirement
and Financial Security for Older Workers "
Hoarding Cash in Their
Retirement Plan Account
Overall portfolio allocations among 2,000 investors
currently participating in a workplace retirement plan:
l Equities 29%
l Cash 28%
l Fixed income 19%
l Target-date funds 16%
l Other 8%
C 28%ash
Source: Schroders,
2024 US Retirement Survey
Despite Inflation, Retirement
Confidence Holds Steady
70% of Americans say they feel that they have
enough money to live comfortably throughout
retirement. That figure is similar to last year's, but more
people are concerned about rising prices, with nearly
80% of workers and 70% of retirees expecting inflation
to remain high for the next 12 months.
Source: Employee Benefits Research Institute, 2024 Retirement Confidence Survey
PLANSPONSOR.COM September - October 2024 9
Of plan participants
who allocated to
cash, two-thirds
did so because they
feared losing
their assets if
the stock market
slumped, and 24%
said they were
unsure how
to invest cash.

http://www.PLANSPONSOR.COM

PLANSPONSOR - September/October 2024

Table of Contents for the Digital Edition of PLANSPONSOR - September/October 2024