Given her role as State Street Global Advisors’ head of defined contribution (DC) plan participant engagement, Megan Yost spends a lot of time analyzing not just how retirement plans are designed—but also how they can be improved to meet the needs and expectations of real people.
Yost, who says her organization “supports all efforts to make retirement more accessible, straightforward and achievable for Americans of all backgrounds and income levels,” recently got a chance to present some of her beliefs and recommendations to the ERISA Advisory Council, during a late-August meeting called to discuss portability issues in the U.S. DC savings system.
Yost tells PLANADVISER she found the whole experience of speaking before the council and of hearing other experts called from across the retirement industry “extremely encouraging.” She feels the ERISA Advisory Council, in a word, is committed to finding new and innovative ways to prevent workers from losing their hard-earned savings to poor decisionmaking at so-called inflection points in the retirement savings lifecycle—changing jobs, facing unexpected financial emergencies, etc.—and to improve their retirement savings outcomes overall.
“There was pretty clearly a consensus at the hearing that is extremely important to allow people to have more choice and flexibility and ease when looking to consolidate DC accounts,” Yost says. “There is a real appreciation that the retirement savings journey needs to match the increasingly fluid and self-directed career paths that many individuals follow.”
Looking across everything she heard during the day, she now believes most people across the industry “really think keeping money in-plan is important for the future.”
“Everyone is looking at ways they can contribute to this end goal,” she says, “which is so critically important because none of us as individual providers can do this unilaterally. It’s a fairly complex issue and even more complex than I think a lot of people assume on the surface. There is a lot of operational complexity to be taken into account, and then there is also the task of marrying the processes with the user perception and experience.”
NEXT: What greater portability looks like
For her part, Yost told the ERISA Advisory Council that clear evidence exists showing employers who understand the mindset of today's consumers, as well as their shifting expectations, can effectively encourage greater workplace retirement savings. Changing the approach, tone and tenor of conversations with employees about retirement can get people to alter their behaviors, she stressed.
Looking at next-steps, she hopes and expects the ERISA Advisory Council will “continue bringing together everyone who is a part of the DC ecosystem and who will have to participate in building real solutions to the portability problem.”
“We are thrilled about this because we know how important tax-qualified employer-sponsored DC plans will be for the financial future in the U.S.,” Yost adds. “It is proven that keeping money in workplace savings plans is one of the most efficient and effective means of helping people generate savings and new investments, and so we need to make sure we are building on that.”
Yost's practical recommendations to improve retirement experiences “in a workplace undergoing a seismic shift” build upon progress made as the result of the Pension Protection Act of 2006. They include encouraging regulators to “protect employers who proactively encourage employee roll-ins,” and allowing employers to proactively suggest that employees select a plan's default investment option for any dollars being rolled into the plan from another DC account.
Yost says this approach “favors the silent majority over investment hobbyists and enthusiasts.”
“In terms of other specific recommendations we think are absolutely critical for the next 10 years, we also need to see the automation of the rolling of savings from one employer plan to another via new collaborations among recordkeepers and investment companies,” Yost says. “Tied to this, we should see the simplifying, standardizing and digitizing roll-in application paperwork, and it should be made very easy to find and access roll-in documentation.”