A New Approach to Evaluating Plan Wellness
When optimizing their participants’ retirement outcomes, most sponsors wish to do so in a cost-effective way.
The Power of Plan Wellness
By focusing on Plan Wellness, advisers and plan sponsors can build a plan that helps participants achieve successful retirement outcomes while also enabling plan sponsors to make the most efficient use of their dollars.
Read: The Power of Plan Wellness
A New Approach to Plan Wellness
When optimizing their participants’ retirement outcomes, most sponsors wish to do so in a cost-effective way. After all, sponsors have other priorities, such as health care costs, competing for limited resources, so they need to maximize outcomes to get the largest possible return for the investment they have made in their retirement plans.
Plan PowerSM marries these two objectives in its measurement of plan wellness by factoring in two outcomes that mirror sponsors’ objectives: successful retirement outcomes for participants and cost efficiencies for sponsors.
The Plan Wellness Framework
Financial wellness is top of mind for many defined contribution plan sponsors who recognize that having participants who are financially secure benefits sponsors and participants alike.
In evaluating their DC plans, sponsors and their advisors may consider a framework that includes three key elements of plan wellness—responsiveness to industry trends, optimization of plan design, and suitability of investment options.
Using this framework, sponsors can work with their advisors to evaluate their plan wellness and explore how modifying their plan design, including the plan’s investment options, may further boost participants’ retirement readiness and financial wellness.
| The Plan Wellness Framework | |
|---|---|
| Industry Trends | Staying on top of trends that relate to DC plans will help sponsors adapt to an environment that is subject to changing regulations, increasing litigation, and increasing fee pressures. |
| Plan Design | Plan features, such as automatic enrollment and escalation, can be used as levers to drive desired participant behaviors. Sponsors should consider optimizing their plans by redesigning plan features for more impactful and cost-effective outcomes. |
| Investments | Creating the right menu of investment choices and default options can help guide participants’ investment behavior. Sponsors should consider which Qualified Default Investment Alternative (QDIA) is best suited for their own participant base. |
82% of financial executives believe that their companies benefit from having workforces that are financially secure.1
Helpful Resources
Target Date Fund Evaluation Checklist
Download the Checklist Target Date Fund Evaluation Checklist
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