New Focuses for Plan Sponsors
Speaking at a CEO roundtable discussion at the PLANSPONSOR National Conference, Elaine Sarsynski, EVP of MassMutual’s Retirement Services Division, said she encourages plan sponsors and advisers to focus on plan health and plan action. “The question I always like to ask a plan sponsor or adviser is, do you know how many people in your plan are on track to retire with 75% monthly replacement income at age 67?”
Christine Marcks, president of Prudential Retirement, said the new focus for plan sponsors is longevity. “People are beginning to recognize that there is a much higher likelihood that they are going to spend 25 to 35 years in retirement, and that’s the scary factor here. [Defined contribution] plans were not initially designed to solve for that risk. There is growing interest, and growing recognition, that this is something that we need to do, and that plan structure needs to solve.”
Pat Murphy, managing director and head of distribution for New York Life Retirement Plan Services, added that “there is an opportunity to use technology for us as an industry and to stop looking at your employee as a participant in a 401(k) plan that we are managing, and to use technology and aggregation tools to understand the individual as a whole person.” Murphy referenced, for instance, that many participants have what some call “yapping dogs,” or assets in other plans that need to be considered when evaluating retirement readiness.
With technology having already altered the delivery methods of statements, disclosures and how participants access their plans, Alison Cooke Mintzer, global editor-in-chief of PLANSPONSOR, asked how technology will be used to improve outcomes. Marcks said the guiding principle is to go mobile. A recent survey indicated 55% of adults use smartphones in some capacity—triple the number from last year. “We’ve been focusing on engaging with participants, and we’ve done studies on how to engage the Millennium generation with gamification techniques. This will change over time, but this is the direction we’re going in now. We’ve also become engaged in virtual and online communities.”
Murphy said, “With technology, it’s imperative that we create better outcomes and not just make the process simpler for us and make us more profitable. That would be selfish. Human interaction is critical to get participants comfortable to make decisions. We will deploy video chat for those who contact our call center, in the absence of an adviser—they want to look at somebody and have a trusted conversation.”
Sarsynski said MassMutual looks at technology as “easier, faster, and cheaper for plan sponsors, advisers and participants. We need to get those motivated moments so that participants can take action so that we can ensure that they retire on their terms. That’s how we go to work each day and that’s how we use technology.”
The panelists discussed the emerging idea of a retirement benefits exchange. For example, some small- to medium-sized companies are considering in the future offering employees a stipend, and, similar to health benefit offerings, have them choose what would work best for them as individuals. A program such as this may help drive down escalating costs for smaller businesses.