Virus exacts toll on women’s retirement savings, workplace diversity efforts – panel

The issues facing women in saving for retirement dominated discussions at Pensions & Investments' Defined Contribution Spring Virtual Series held March 8-11.

With the pandemic bringing those issues into sharp relief, talk centered on the "shecession," a reference to the COVID-19-triggered exodus of women from the workforce as they wrestled with the lack of child care options.

During a panel discussion on the first day of the conference, which coincided with International Women's Day, speakers lamented the departure of women from the workplace, which they said not only hurt women's retirement security but also damaged gender diversity efforts at the companies where they worked.

"If we felt the situation was bad for the most vulnerable female workers among us before the pandemic, it is really bad now and corrective steps need to be taken to right the ship," said Victoria M. DeFrancesco Soto, assistant dean in the Lyndon B. Johnson School of Public Affairs at the University of Texas at Austin.

The speakers cited a report from the Center for American Progress, a non-partisan think tank, which estimated that women's total lost wages would amount to $64.5 billion a year if the levels of maternal labor force participation and work hours experienced during the April 2020 first-wave peak of infections were to persist long term.

"Four times as many women as men dropped out of the labor force in September alone, roughly 865,000 women compared with 216,000 men," said moderator Nikki Pirrello, P&I's chief operating officer, citing the report.

The panelists discussed a variety of measures that plan sponsors can adopt to help prevent women from leaving the workforce or to help entice them to return, such as flexible work arrangements, paid fellowships and even sabbaticals.

Ms. Soto cited the example of a female vice president "high up in a well-known company" who left the workforce in the throes of the pandemic, a decision she said she felt she had to take "if she wanted to stay sane and be there for her family."

"The idea of the sabbatical is especially productive for these women," Ms. Soto said. "You don't want them to walk away like this VP did from this company."

The challenge of child care, however, can create good opportunities to engage participants in their efforts to save for retirement, said Michael Madowitz, a Washington-based economist with the Center for American Progress who delivered the conference's opening keynote address.

Simply telling people they need to set money aside for retirement and "not touch it," he said, is "not really getting through to people on the margins." What plan sponsors need to do is connect with people on problems such as child care that are "a little outside the standard retirement framework," he said.

Mr. Madowitz introduced an interactive calculator that could help participants plan for the impact that a break from the workforce to provide child care would have on their long-term retirement savings. The calculator showed that a 29-year-old woman earning $44,000 who took a two-year leave from the workforce to care for a child would forgo a total of $302,809 in lost wages, wage growth and retirement assets over the woman's entire working life.

If, however, the woman delayed childbirth and caregiving for five years, her loss would fall to $270,287, according to the calculator.

"We have the tools to help analyze a lot of problems that are well beyond what we're used to dealing with," he said, adding that such tools can help entice participants to engage with their retirement plans.

Panel discussions also turned to the related topic of plan sponsor efforts to bridge racial disparities in retirement savings. Black and Hispanic households lag white households not only in terms of access to retirement plans but also in terms of plan participation and savings rates, said Richard Bynum, the Springfield, Va.-based chief corporate responsibility officer at PNC Financial Services Group Inc.

Mr. Bynum encouraged plan sponsors to use data to "identify and prioritize the groups that need the most help" and to lean on record keepers for the data. "It's helpful to have a plan record keeper that's able to provide this data so that you can consistently go back and address where you are relative to the baseline that you started with," he said.

Mr. Bynum also prompted plan sponsors to select advisers and other vendors with experience in relating to minority groups. "You may want to think about the backgrounds of your educators and your advisers who are interacting with those employees," he said, adding that they should be "representative of the workforce."

Another popular topic revolved around the issues facing retirees, a demographic of growing importance as waves of baby boomers exit the workforce.

To help retirees continue to take advantage of the low investment and administrative fees they enjoy as participants in workplace retirement plans, many plan sponsors are looking to retain their assets in plan. Two in 3 sponsors prefer to retain retiree assets or actively seek to retain them, up from 46% in 2015, said Joseph Healy, senior vice president, account manager and DC specialist at Pacific Investment Management Co. LLC in Summit, N.J.

In a panel Mr. Healy moderated, executives of three plan sponsors – General Electric Co., Oak Ridge National Laboratory and Navistar Inc. – discussed efforts to educate near-retirees about the benefits of keeping their assets in the plan vs. rolling them over into an individual retirement account or annuity.

"We still have brokers who reach out to our participants every day trying to get them to take their 401(k) balance out and buy an annuity," said Carissa Dunaway, division director of pension and savings at Oak Ridge National Laboratory in Knoxville, Tenn.

Many participants don't appreciate "the cost saving they get for institutional pricing," added Greg Bouleris, GE's Norwalk, Conn.-based senior vice president, pension investment oversight.

In a separate panel on lifetime income solutions, speakers stressed the importance of offering participants both guaranteed and non-guaranteed retirement income options.

Because some people are going to live to be 100, 101 and 102, "a solution that includes both a guaranteed and a non-guaranteed option is the answer for everyone who's trying to solve the retirement income challenge," said Kelly Hahn, executive director at J.P. Morgan Asset Management in New York.

Other prominent topics of discussion focused on the plan sponsor and participant response to COVID-19. Speakers stressed the importance of robust financial wellness education programs and communicating virtually with participants as the pandemic upended the economy and people's lives.

Panelists also noted that the pandemic provoked increased participant engagement with their retirement plans and greater interest in educational webinars and one-on-one meetings, even when offered digitally rather than in person. The virtual group and one-on-one meeting also enticed participants' spouses and partners to attend, according to many speakers.

Erika Grace, the Bellingham, Wash.-based leader of financial wellness and digital strategy at Empower Retirement, said that while people historically have logged into their retirement accounts during typical work hours, since the pandemic began, people are checking their accounts and accessing financial wellness tools at all hours.

"The time during the day during which people are accessing those tools has expanded," Ms. Grace said.

Staff reporter Brian Croce contributed to this story.