Data & Research March 28, 2016

Sponsors Want More Frequent Plan Reviews

When reviews do take place, they often fail to focus on participants’ retirement outlook.
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Retirement plan sponsors would like their advisers to review their plans more frequently, and when they do, to focus more on what the sponsors consider important, according to research from MassMutual Retirement Services.

Fifty-seven percent of sponsors would like advisers to review their plans semiannually or more frequently, yet only 44% of advisers do so.

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“Frequent, focused plan reviews are essential to assess the ongoing effectiveness of a retirement plan and to help ensure that plan participants are saving enough to retire when they reach their traditional retirement age,” says Tom Foster, spokesperson and practice management leader for MassMutual Retirement Services. “It’s a clear opportunity for financial advisers to improve and build their retirement plan practices.”

Plan reviews can lead to improvements such as new plan designs to better meet an employer’s objectives, Foster says. Any improvements to a plan should generally start with a careful review and include consultation with plan legal counsel and other experienced advisers, as appropriate, he adds. However, when reviews do take place, advisers and employers fail to focus on savings rates and retirement outlook, he says.

“Unfortunately, only one in four sponsors reviews its plan to determine whether employees are actually saving enough to retire,” Foster says. “This points to a missed opportunity on the part of both advisers and sponsors. We need to focus more on the effectiveness of the retirement plan and educational programs to help ensure that working Americans are saving enough to retire on their own terms.”

Greenwald & Associates polled 565 employers that sponsor retirement plans for MassMutual.

Products March 28, 2016

Plan Sponsors Can Get Student Loan Solution from Prudential

Through a partnership with Student Loan Genius, Prudential clients can offer a student loan repayment benefit that will help employees save for retirement.
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Prudential Retirement has partnered with Student Loan Genius, becoming the first retirement plan recordkeeper to offer the start-up’s new 401(k) contribution feature.

The new partnership with Student Loan Genius will enable Prudential Retirement to offer an innovative benefit to clients that gives their employees an opportunity to build retirement savings while paying down student debt. Employers who offer this retirement savings vehicle gain a competitive advantage, as it enables them to attract and retain top talent, Prudential says.

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If an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pre-tax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching contributions.

The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.

“As student loan debt grows, workers are having to choose between paying off their student loans or prioritizing other important financial goals,” says Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement. “For example, our research tells us many workers will choose to pay down debt rather than save for retirement. As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers.”

A recent survey from Beyond, a job placement website, found 89% of job seekers with student loan debt believe companies should offer student loan repayment as part of the benefits package, and 10% ranked student loan repayment higher than a paid vacation policy as the “most important” benefit.

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