New data points to the importance of plan sponsors continuously communicating with employees about how even modest savings add up on the path to retirement. Here are tips on boosting confidence in retirement saving.
There’s a lot of distraction in the air: chances are your employees are experiencing financial stress at work. With many workers concerned about setting aside money for emergencies, paying off debt, or saving for education, retirement saving seems out of reach. Plan Sponsor reports that a recent Schroders retirement survey found:
- 70% of respondents said they do not have enough savings to add to a retirement plan;
- 60% indicated hat they have other financial priorities; and,
- 50% said the future is too uncertain.
What’s A Plan Sponsor To Do?
The belief that “a little” saving is not worthwhile, holds employees back from saving for retirement. Experts say that plan sponsors play a critical role in boosting employee participation by communicating about how even modest savings add up, and designing the plan to enable habitual saving. Advice includes:
Enabling plan design features, such as a “set-it-and-forget-it” options like automatic enrollment and automatic escalation, along with an emergency savings vehicle, can help participants gradually save over time, suggests Harry Dalessio, head of institutional retirement plan services at Prudential Retirement in Hartford, Connecticut.
Sponsors can also help participants manage short-term money stressors by providing a range of financial wellness tools and resources, including but not limited to student loan programs, debt and credit management tools and budget development programs, Dalessio adds.
Employer communication and education can also contribute to participants’ financial wellness. “Sponsors shouldn’t underestimate the value of offering communications on plan features, the long-term impact of compound interest and understanding the importance of transitioning their accumulated savings into a guaranteed income stream as they are approaching retirement,” Dalessio says.
Of course plan sponsors also have an important role in safe-guarding the hard earned savings in the retirement plan. For starters, remember, an ERISA Fidelity Bond is required by the U.S. Department of Labor to protect the assets of the retirement plan from theft.
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