While there are a few mandatory provisions of the SECURE Act such as extending the minimum required distribution age from age 70-1/2 to age 72, most provisions can be adopted for your retirement plan at the discretion of the plan fiduciaries. Decisions to adopt plan provisions are typically based on factors like total rewards philosophy, ease of administration, and cost to implement, as well as the value to participants.
So how can your organization consider participant value in your deliberations? And, once implemented, how can you raise awareness of the new provisions among your employees?
Here are several ideas on how to proceed:
- Step into your employees’ shoes. Taking a deeper dive into your employee data helps you identify common employee concerns. Think through how key groups of employees may be affected by plan changes, as well as the information they’ll need so they can use the plans to their advantage. With that information you can step into a hypothetical employee’s shoes and consider things the data won’t show, such as their likely priorities, financial needs, and barriers to saving. From there, listen to what your employees say about the plans you offer.
- Keep your ears open. Once a slate of plan changes has been identified, consider testing their potential effectiveness through employee listening activities, such as focus groups or optimization exercises. These activities can help you understand how your people will perceive and value the provisions. You can also identify gaps in your employees’ knowledge regarding how the plans work today and what the changes will mean. This information will give you additional insight that you can use to help inform and guide employee participation in your benefit plans.
- Spread the news. Before finalizing any changes, think broadly about using these opportunities to educate employees about strategies that might help them meet short-term financial needs and long-term financial goals. For example, employees early in their careers may have interest in the new penalty-free withdrawals for new parents, as well as the ability to use 529 dollars to pay down student loans. A strong financial wellbeing program can help inform employees of the potential risks and benefits of using plan provisions as levers to help them meet their goals.
When you start putting the new provisions in place, please remember one thing: there’s a lot more to communicate beyond straightforward updates to summary plan descriptions and election forms. And every communication is an opportunity to secure the bond with your employees – an opportunity that’s there for the taking.
Want to learn more about the SECURE Act and the implications for your plan? Watch our on-demand webinar.
