Retirement experts are finding that despite the disruptions of the pandemic, employees are trying to focus on retirement saving—and planning. Increasingly, employees are looking for information about how retirement savings translate to retirement income. Plan sponsors are encouraged to keep the communications coming.
Financial stress at work is bad for people—and the bottom line too. What are employees worried about now? As reported by Plan Sponsor, a BlackRock DC Pulse Survey offers some important clues:
While the study found that most workers are still on track to save adequately for retirement (87%), almost half of respondents indicated personal concerns over retirement income.
Fifty-five percent of respondents said they worried over the thought of having to generate their own retirement income, while 59% stated difficulty translating retirement savings into monthly income. Sixty percent worry they will outlive their retirement savings, and 77% are looking for help to get through retirement rather than simply reaching it.
As more participants inquire about guaranteed lifetime income solutions, forecasts show a rebound for most annuity products in 2021. The Secure Retirement Institute (SRI) forecasts that all individual annuity products, except traditional variable annuities and fixed-rate deferred annuities, will recover this year due to improving economic conditions and high demand, with products including protection features reaching significant value. By 2025, SRI expects the annuity market to grow as much as 30%.
With interest in annuities growing, the BlackRock survey also found that 82% of plan sponsors anticipate offering this option to participants in the year ahead. Like all plan design features, it’s important to communicate with participants about the benefits of new options. In fact, experts remind retirement plan sponsors that continuous employer communication and education can meaningfully impact the financial wellness of employees. As one sums up: “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….”
When communicating with plan participants, don’t forget to follow the Department of Labor’s recently issued guidance on promoting cyber security. With cyber theft from retirement accounts—including small ones on the rise, its extra important to keep current with the related regulations.
Protect Retirement Funds—and yourself
Safe-guarding the hard earned savings in the retirement plan is a continuously important duty of plan sponsors. For starters, remember, a current ERISA Fidelity Bond is required by the U.S. Department of Labor to protect the assets of the retirement plan from theft. As a plan sponsor, you will also find it important to have fiduciary liability protection—and cyber coverage for both your business and your retirement plan. The good news for busy plan sponsors is that national ERISA Bond leader, Colonial Surety Company offers a convenient and affordable protection package. Annual premiums are less than what you would pay for even one hour with an expert ERISA lawyer if an unexpected allegation, breach or compliance issue lands on your desk.
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What If You Make a Mistake?
Retirement plan sponsors make many decisions—what if you make a mistake and face personal exposure for breach of a fiduciary duty? Consider how even one allegation of a fiduciary breach would divert attention and resources from your work—and life. For example, if you suddenly needed an attorney with ERISA expertise, you would likely pay upwards of $600—per hour. Don’t wait: secure Colonial Surety Company’s affordable fiduciary liability insurance and you’ll be covered for defense costs and penalty limits up to $1,000,000.
Remember: the required ERISA bond protects the assets of the retirement plan from theft; Fiduciary Liability coverage protects you and your assets from personal liability; and, Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach. With Colonial, you can easily and quickly secure this comprehensive coverage package today: Complete and Affordable ERISA Bond Package.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and trusted by retirement plan sponsors all across the country.