Quantifiable Results?



Planning, saving and investing for retirement has always been full of unknowns and these days, retirement plan participants and sponsors alike find themselves particularly bleary eyed. Experts encourage plan sponsors to try focusing on three areas where they can really make a difference.


Three Areas of Action

According to Tom Hawkins a Senior Vice President at Retirement Clearinghouse, plan sponsors can produce quantifiable results like “decreased cash-outs, higher levels of consolidation, and average plan balances, as well as a lower incidence of missing participants,” by focusing on these three areas of action:


No. 1. Educate participants on the harm of cashing out

No. 2. Facilitate consolidation of participantsretirement savings

No. 3. Keep participants linked to their plan balances


Results against these actions turn out to be great for everyone involved. For one thing, curbing the problem of missing participants is a priority for the Department of Labor, and following the related guidance is a must-do for plan sponsors. Specifically, the DOL guidance instructs plan sponsors to: maintain complete and accurate census information; communicate with participants and beneficiaries about their benefit eligibility; and, implement effective policies and procedures to locate missing participants and beneficiaries. Going beyond these compliance necessities, Hawkins underscores the value of acting toward improved individual and plan balances, pointing out  that 401k plan sponsors “stand to benefit from increased levels of consolidation, as plans with higher average balances tend to enjoy lower average plan costs, and their participants will experience the benefits of enhanced financial wellness.”


92.4 Billion In Lost Savings?

That’s not good for anyone’s retirement, right? But that’s the amount getting cashed out of accounts—annually! Increased participant awareness about the high cost of cashing out even accounts with small balances can make a real difference. Hawkins points out the imperative for educating participants on the harm of cashing out early:


Each year, at least 6 million job-changing participants — around 40% of the total — will cash out completely, representing $92.4 billion in lost savings, according to EBRI. While some cash-out leakage is to be expected in our voluntary 401k system, only about one-third of those cash-outs are due to an actual financial emergency, based on a 2015 Boston Research Technologies study. The demographic segments that suffer the most from cash-out leakage include minorities, lower-income workers, and younger age cohorts, all cashing out at much higher levels vs. the broader population.


Consolidation Please

While participant education is key, plan sponsors also have the ability to propel further progress by making it easier for employees shifting jobs to “roll” their retirement savings in and out with them. In addition to advancing autoportability, Hawkins suggests these three tasks for plan sponsors:


  • If your plan is in the 5% of plans who dont allow roll-in contributions, update your plan provisions to allow them.
  • If you already allow plan roll-ins, promote the roll-in feature to newly enrolled participants.
  • Encourage more consolidation at enrollment via a facilitated roll-in programor following termination through an assisted roll-out program — both of which can make the consolidation process painless for participants.


Continuously Responsible

At the end of every day, retirement plan sponsors have a fiduciary responsibility to ensure participants are benefitting from the plan. Toward that end, it’s important for plan sponsors to manage risks to the plan, the company and themselves. That’s why Colonial Surety offers an affordable Fiduciary and Cyber Liability insurance Package, arming plan sponsors with:


  1. Legal defense and coverage for penalties against claims of alleged or actual breaches of fiduciary duties.
  2. Defense against lawsuits and regulatory actions related to a cyber breach.
  3. Expert-led response, notification and crisis management services to prevent a cyber incident from spiraling into a disaster.


The  annual cost of our Fiduciary with Cyber Pack is less than the fee for one hour of expert legal defense if a lawsuit or regulatory challenge strikes you and your business. Let’s get you covered, in minutes, today: Plan Sponsor Protection Package.


Don’t Forget

An up to date ERISA Fidelity Bond is required by the Department of Labor. As a leading national ERISA bond provider, Colonial helps plan sponsors ensure compliance. Uniquely, Colonial includes retroactive ERISA fidelity bond coverage for years when the plan was not adequately covered. Additionally, plan sponsors can opt for multi-year coverage, ensuring the ERISA bond remains Department of Labor compliant for the life of its term. Obtain or Renew ERISA Fidelity Bond Here Now.


Colonial Surety was founded in 1930 and continues giving customers the assurance that they, their businesses, and their clients are safeguarded with the right surety and insurance products at all times. We are a direct and digital insurer offering products through an online platform supported with exemplary customer service. We give customers a simple, direct, and instant service that takes the pain out of buying insurance and bonds. Colonial Surety is licensed in every state in the U.S., rated A” Excellent by A.M. Best, and listed by the U.S. Treasury as an approved surety.