Imagine your CEO is upset because he was just told that large numbers of older workers are delaying their retirements. He wants to know not only why this is occurring, but also why he and the chief financial officer weren't made aware that this was a likely possibility a few years earlier. Thus, he has called a meeting that includes the CFO, vice president of human relations, the benefits director, the 401(k) committee chairman and the 401(k) manager to get answers to his questions.
The agenda for the meeting includes asking for:
- a summary of annual assessments of changes in the retirement readiness of the entire workforce, incorporating all the company's retirement programs;
- with whom were the readiness analyses shared;
- an explanation of what actions, if any, were taken based on the findings of the retirement readiness assessments; and
- a summary of what conclusions were being drawn as to the effectiveness of the company's overall retirement program.
The agenda would also include an explanation of why no one brought the impending retirement crisis to his attention as well as the CFO's given its likely consequences, including a decrease in productivity resulting from workers having to delay retirement, increased health-care costs, and the impact on retaining talent.
If retirement readiness assessments aren't available, the CEO would want an explanation of:
- why they aren't, including who made the decision not to perform the assessments and the reasons for that decision; and
- how the effectiveness of the 401(k) plan and overall retirement program can be evaluated, including the consequences of freezing the defined benefit plan.
In addition, the agenda would include a summary of what is being done to encourage all the employees to address their retirement income need and how retirement readiness assessments were used to develop participant communications and whether or not those communication efforts were effective.
In fact, the only discussions the CEO could recall about the 401(k)'s value proposition focused only on what was important to the corporation: fees being competitive and the desire for employees to view the 401(k) as a valuable benefit that was comparable to those offered in the firm's industry. Whether the 401(k) plan provided any real value to the employees, i.e., would significantly help participants achieve retirement security, was never discussed.
The CEO called the meeting so that he could get an explanation as to why no one appeared to have monitored the company's overall retirement program in a holistic manner, and if someone did, how he missed seeing that the retirement program was broken from the perspectives of the company and many of its employees.
The obvious question is: What are you going to say when called upon at the meeting you have to attend?
Richard D. Glass is president of Investment Horizons Inc., Pittsburgh.