Patricia Advaney, senior vice president, Participant Solutions, Diversified, notes that the stock market is moving toward significant milestones since the recession of 2008, the unemployment picture is better, consumer confidence is up and defined contribution plan participants are seeing their account balances buoyed up after 2008 and 2009 declines. With the general feeling that the economy is rebounding, plan participants are now psychologically more receptive to the retirement savings message, she contends.
When the economy declined, not only did some participants pull back on their retirement savings, but some plan sponsors were reluctant to initiate auto enrollment or auto escalation plan features, or they held down default deferral rates for auto enrollment, Advaney told PLANADVISER. With the economy improving, it is a good time to remind participants of the long-term success of their retirement plans, and to remind sponsors of the benefits to employees of automatic enrollment or automatic deferral escalation plan features.
Advaney says Diversified’s research shows participants are open to automatic escalation; 78% indicated they want an easy way to increase savings each year.
One thing Diversified is doing is pushing out messages to low savers giving them information about what people like them are saving, i.e. averages for their plan, their age group, etc. The messages encourage those saving below average rates to increase savings to at least the average.
Sponsors shouldn’t shy away from those types of messages anymore, and they can team up with plan advisers and providers to get messages out to participants.
“Those influenced by doom and gloom in the economy, we want to appeal to those folks to tell them it’s not bad anymore, it’s OK to save and invest, it’s for the long-term,” Advaney says.