Looking at the role of plan design in driving member outcomes, it comes down to data and experience, according to Margaret Rux, principal and department head of retirement plan client services at the Vanguard Group., at Benefits Canada’s 2019 DC Plan Summit in Banff, Alta. in February.

Capturing data from five million members and more than 2,000 plan sponsors, the investment manager found more members are investing in a single target-date fund through their retirement programs. “That is plan design, that is automatic enrolment,” said Rux, noting how this simplifies the investment experience.

Read: Eliminating ‘tyranny of choice’ in DC plan enrolment

DC plan members are savers, not investors, so plan sponsors must add levers, she said. This can include auto-enrolment, automatic contribution increases and re-enrolment. It’s also important to design a plan that accommodates people in the distribution phase, noted Rux, whether that means offering the right advice tools to guide them through the accumulation phase, making sure the plan has partial distribution functionality or using buying power to purchase lower share cost funds.

“You take your average participant member — they roll out of the plan, go to a retail [independent retirement account] and they’re going to pay considerably more. So it’s much more advantageous to the member to stay in the plan from a pricing power perspective.”

Read more coverage from the 2019 DC Plan Summit.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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