RESOURCES / PLAN DESIGN
Is your defined contribution plan successful?
5-minute read
THE TAKEAWAY
Influence participant outcomes with clear objectives and metrics
Overview
Measure, adjust and repeat
A plan sponsor has tools such as clear objectives, regular measurement and strategic adjustments, to influence participant outcomes. Each plan should develop its own set of goals, then focus on three key metrics to gauge the plan’s success: participation rate, savings rate and investment results.
Achieving a plan’s objectives requires constant measurement and continuous improvement. If the plan falls short of its initial success objectives, sponsors may want to take additional steps to make it stronger. Measure and adjust repeatedly and regularly.
The problem
Efforts such as participant education to improve retirement readiness get mixed results because they rely on participant action.
A potential solution
Improve participant outcomes by focusing on things plan sponsors can control.
Success metrics
Focus on three key metrics and action steps to gauge your plan’s success. Note that each plan should develop its own set of goals.
Tips for success
Keep retirees in the plan
Retirees can benefit from access to low-cost investment options and fiduciary oversight. Sponsors can benefit from the boost in plan assets, which create economies of scale.
Be a complete retirement program
By addressing both the saving and spending phases of retirement.
Support retirees
Eliminate withdrawal fees, and allow flexible withdrawal options e.g., scheduled and adhoc withdrawals.
Create a retirement tier in the investment menu
Include liquid retirement income options.
Evaluate with retirees in mind
Assess the target date fund against retiree needs.
Communicate
Include benefits for retirees in plan communications.
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