Jacqueline Louie
The main deterrent for some employers is the increased costs that would result. Another reason is, employers prefer not to force enrollment on employees who don’t want to commit a set amount of their salary to a retirement plan.
Ken Millard, vice-president, group retirement services products and pricing, wealth management at Great-West Life (formerly vice-president, national accounts, group retirement services), shared the best ideas from the topic discussed at the 2015 DC Plan Summit.
Key takeaways for employers:
- The success of a DC plan is facilitated by early enrollment and meaningful contributions to a plan over time.
- Implementing auto-enrollment with auto-escalation features can better position members’ contributions to grow to a meaningful level. To this end, employers can make it easier for members to participate by offering a simple investment lineup for employees to easily choose which funds to invest in, including an appropriate default fund (e.g., a target-date fund).
- If plan sponsors are concerned about being able to afford 100% enrollment, they can simply adjust their matching formula. To deal with any employee push-back about auto-enrollment, remind employees they always have the choice to opt out.
- Employers must ensure members can’t make withdrawals from their plan for any reason until they retire.
View more videos from the 2015 DC Plan Summit.
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