Key Considerations for Plan Sponsors
- January 18, 2022
- Posted by: Jeff Atwell
- Category: Financial Plan, Resources
We are starting a new year and now is a great time for Plan Sponsors and their Financial Advisors to evaluate how well the retirement Plan is achieving the income replacement goals of the Plan Participants. Most recordkeepers providing services to Plan Sponsors have excellent tools for Participants and reports for Plan Sponsors to review.
In the first quarter of 2022, the new DOL regulations will become effective requiring monthly income to be illustrated on Participant statements. For many Participants this will have a significant impact because the monthly income amount illustrated will be much smaller than the monthly income the participants will need when they decide to begin withdrawing funds for retirement.
This creates a significant opportunity for Plan Sponsors and their Financial Advisor to create ongoing Participant education and communication programs in addition to reviewing Plan features which are designed to increase Participant contributions and retirement income.
The attached article by T. Rowe Price outlines four key considerations for Plan Sponsors:
- What role do employers want to play in assisting both current and former Participants in planning for retirement
- What range of advice and planning services to make available to Participants
- Understanding one size does not fit all for every Participant, therefore different products and services may need to be made available
- Employers can assist those near retirement by providing information on various topics Participants will need to navigate in retirement
The private sector retirement industry has created wonderful tools, and resources and regulations favorable to Plan Sponsors are in place. This creates the opportunity for very robust services and products to be offered to Participants. The end result will be a very successful retirement plan and employee benefit.