Cybersecurity. The aging workforce. Missing participants. Litigation risk. There are plenty of issues keeping plan sponsors awake at night.
But there was another theme that stood out in the 2019 Excellence & Innovation Awards, notable because it really wasn't about retirement at all — at least not in the traditional sense.
It is about plan sponsors finding ways to help their participants get a handle on their personal finances and bolstering their overall financial wellness. Topics from student loan repayment to saving for emergencies to overall budgeting were among the focus of the awards and panel discussions last week at Pensions & Investments' West Coast Defined Contribution conference — discussions that underscore just how important these three areas are to plan sponsor executives.
As part of the conference, the 2019 Excellence & Innovation Awards — presented by P&I and the Defined Contribution Institutional Investment Association — recognized two plan sponsor executives for their efforts in addressing student loans, a burden many fear is keeping many participants from saving for retirement.
Mary Moreland, executive vice president, human resources at Abbott Laboratories, won an Innovation Award for her work creating the company's Freedom 2 Save Plan. The plan directs a company contribution to the 401(k) plan on behalf of an employee regardless of whether that employee is contributing to the plan, if the employee is using 2% of his or her salary for student debt payments.
And Carl Gagnon, assistant vice president of global financial well-being and retirement programs at Unum Group, received an honorable mention in the Innovation category for a new company program that will give employees the option to convert the value of some unused personal time off into a payment toward their student loans. Unum's effort, which will begin in January, isn't directly linked to a defined contribution plan.
A variation on the wellness theme was about helping people, possibly via a retirement plan, save money for an inevitable emergency.
Speaking at the conference, Katie Selenski, executive director of CalSavers, described how many participants in the new program don't have any other bank or investment savings accounts. CalSavers, which officially opened in July, is a state-run retirement plan for people whose private-sector employers don't offer a retirement program. CalSavers puts the first $1,000 an individual saves into a money market account to offer them the option of using it for emergencies, so that, for example, an unexpectedly big bill for a car repair isn't a crisis.
Others agreed that emergency savings accounts, funded through after-tax payroll deductions, could keep people from having to take loans or hardship withdrawals from their defined contribution plans. By avoiding leakage of plan assets, participants will save more for retirement.
As the awards and the panel discussions showed, there is no shortage of good ideas being generated and acted upon to improve the chances of participants' successful retirements as well as bolster their financial wellness. Plan sponsors are to be commended for taking such a holistic view.
