Retirement plan executives have the significant challenge of getting participants to think of long-term savings, a panel discussed at Pensions & Investments’ Global Future of Retirement conference.
“One of the biggest challenges we have is not around the plan structure or our design or how well we put together our investment lineup,” said Matt Leckrone, senior vice president, global benefits executive at Bank of America Corp. “It’s really how we get employees engaged in long-term savings.”
“We’ve … identified some of the key parts of that problem,” Mr. Leckrone said. “It all stems from getting the attention we need on the subject of long-term savings.”
Bernard “Bernie” C. Knobbe, vice president, global benefits, enterprise human resources at AECOM, said overall financial literacy must improve, and gave the example of how many people stand in line when the lottery reaches a high number and then look at six figures on their 401(k) account and “think they’re OK.”
“We have to get better at educating those employees on what that $130,000 really means,” Mr. Knobbe said.
Even with increased employee engagement, there is the difficulty of employees being able to save for the long term as short-term necessities such as health care take up much of their savings.
Mr. Leckrone said that of employees who leave Bank of America, 20% with balances of $100,000 or less have been taking a distribution rather than rolling it over into another retirement account.
Greg Williamson, chief investment officer at American Red Cross, Falls Church, Va., offered the solution of paying to participate.
“If you want engagement, pay your people to go to the website,” Mr. Williamson said. “Pay them $100 to go to the website. That’s an expense you have to pay up front.”
He added that ultimately, “it would be the cheapest solution to get them to participate.”