Plan sponsors have the tools to influence participant outcomes. They can measure the success of those efforts, act on those measurements, and measure again.
What follows are three key metrics and action steps plan sponsors can use to benchmark plan success. Note that each plan should develop its own set of goals.
For the defined contribution system to be a complete retirement program, it needs to address the spending as well as the savings phase of retirement. Keeping retirees in the plan can result in a win-win for both sponsors and retirees. Retirees benefit because they continue to have access to low-cost investment options and gain the security of fiduciary oversight. Sponsors benefit because retiree investments boost plan assets and therefore economies of scale.
Steps to support keeping retirees in plan:
The process of filling in the gap between where the plan is now and where the sponsor wants it to be involves constant measurement — and continuous improvement. If the plan does not meet its initial success objectives, sponsors may want to take additional steps to make it stronger. These should then be measured — and measured again regularly.
Concerns about participant retirement readiness have driven many plans to take steps such as participant education to improve decision-making. The results of such efforts are mixed, because they rely on participants taking action.
Plan sponsors, by focusing on the things they themselves control, can help drive more successful participant outcomes.
Simplify Menus to Meet Participant Objectives
Fewer and easier-to-understand investment menu choices can encourage more appropriate participant selections.
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An Effective Retirement Plan Does Not End at Retirement
Sponsors can take these steps to support participants in the spending as well as saving phases.
Read more
Re-enrollment Can Lead to Better Participant Outcomes
How to improve participant allocations: case studies, best practices and tips on successful re-enrollment.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses and summary prospectuses, which can be obtained from a financial professional, and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.
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