As employers focused on workforce reductions and ways to get the work done remotely, setting priorities for the 401(k) plan may have been low on the to-do list. But as things begin to normalize, it might be time to push that goal setting back toward the top of the list.
As plan sponsors figure out their plan priorities for 2021, says Mercer in a new report, they should give some thought to their participants’ values. In their “Reinventing retirement. Defined Contribution plans 2021” priorities report, the international consulting firm says 2020 revealed the critical importance of focusing on employees and what they need, want and expect.
Mercer suggests starting by reviewing participant demographics and key behaviors across the benefit programs, with an eye toward the financial pressures experienced during the pandemic. Using the information gathered, it may be easier to understand subsets of employees, and what they value and need from their employer.
Another suggested priority in Mercer’s report is to expand the way plan sponsors think about defined contribution plans. Doing so could benefit participants at every stage. Of course, these plans are a long-term savings vehicle and designed for that purpose.
But the last year revealed a critical lack of overall financial wellness, suggesting the need for assistance with emergency savings. For participants closer to retirement, having a regular monthly income from the plan, similar to a pension, would also be helpful.
Mercer’s 2021 report discusses four more items they believe will take on great importance in the next year. Click here to read more.