A report finds that healthcare plan sponsors in the United States are becoming more proactive in their efforts to help employees adequately prepare for retirement.
The Transamerica Retirement Solutions report Retirement Plan Trends in Today’s Healthcare Market – 2014 notes that plan sponsors are making adjustments to plan design that can help employees achieve retirement goals.
They’re also implementing programs that address the challenge of employee engagement, a hurdle that 75% of sponsors agree is one of the biggest challenges of managing a retirement plan.
Healthcare plan sponsors are addressing the challenge of employee engagement by implementing programs aimed at educating and informing participants.
Because of the diverse needs of their employee populations, these sponsors employ a multi-channel approach to communicate with their participants. They utilize on-site representatives, meetings, customized print and electronic campaigns, investment advice and comprehensive financial planning among many other tactics to help employees prepare for retirement.
The focus on retirement readiness is also illustrated by plan sponsors’ efforts to optimize plan design.
Plan sponsors still use participation rates as a measure of plan success, but the use of this metric is declining. Retirement readiness measures are gradually supplanting participation rates as reliable indicators of plan performance. Plan sponsors that utilize retirement readiness as an indicator of plan effectiveness increased to 35% in 2014 from 23% in 2012.
Eighty-seven percent indicate that their plan’s default deferral rates were not high enough. The number that offer auto-enrollment default deferral rates of 3% or less declined to 48% in 2014 from 70% in 2012, while the rate of those utilizing a default deferral rate of 5% or more nearly quadrupled during the same period.
While nearly four in 10 healthcare plans offer 20 or more investments, there is a clear trend toward offering a more streamlined set of investment choices. The percentage of healthcare plan sponsors that offer 20 or more investments decreased to 39% in 2014 from 48% in 2012.
There’s an increased focus on improving retirement outcomes, says Brodie Wood, vice-president and national practice leader, not-for-profit markets, with Transamerica Retirement Solutions. “These sponsors are well aware of this shift and agree that motivating employees to save adequately and helping them invest wisely are challenges that must be addressed in order to help employees achieve a secure retirement.”
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