BCG Blog - Sponsors

2024 was full of dramatic moments. Given that, it might be easy to have missed some of the key details and trends in the less dramatic world of employee benefit plans. We thought a review of trends and regulations could be helpful for those whose attention may have been drawn to elsewhere.

Here we are – the end of the year and the holiday season. Right now, employees face the challenge of budgeting for all the expenses that come with this time of year: food, travel, gifts, and more. Bad budgeting can lead to high credit card debt, hurting their ability to reach other goals, like saving for retirement. Employers can help employees budget this holiday season – here’s how.

Employees’ interest in savings accounts may be as high as the rates offered on those accounts. But regulations are still slightly less than salient when it comes to how sponsors enroll and incentivize employees to enroll in savings accounts.

A growing number of younger people are looking for “microretirements” as part of their career paths. What is a microretirement, and how can employees and employers work together to benefit each other with this growing trend?

Open enrollment season is often synonymous with stress—for both employees and plan sponsors. With an overwhelming number of benefits options and the complex terminology surrounding them, it’s no surprise that confusion reigns. Fortunately, modern techniques, including new technologies and marketing approaches, are reshaping open enrollment to make it easier, more efficient, and engaging. Here’s what sponsors need to know.

Given the potential changes in regulatory power that could flow from the Supreme Court’s decisions in the summer of 2024, plan sponsors may be wondering if there might be changes in how the DOL enforces its regulations. But that might not be the right tree to go barking up. Instead, a key to understanding changes in enforcement actions could lay with its leadership and its budget.

Having a well-curated policy library in place, particularly in case of an emergency, is no longer just a best practice for plan sponsors—it’s essential for effective risk management. This article explores the importance of preparing a policy library, how plan sponsors can proactively secure sample policies from industry groups, and why working with legal counsel is critical to ensuring compliance and accuracy.

Plan Sponsors may want to consider addressing common misconceptions plan participants have when looking to planning educational resources. Three of the most common misconceptions in retirement planning are 1) budgeting only to prepare; 2) longevity missteps; and 3) amounts over accounts.

In today’s competitive business environment, organizations must continually evolve their employee benefits to attract and retain top talent. One powerful way to ensure that benefits packages resonate with employees is to involve them directly in the decision-making process. Here’s how.

Many Americans have access to retirement benefits through their workplace but may not know how to optimize these benefits. Sometimes, it’s helpful for plan sponsors to review the basics of just how those benefits work and what they mean. Here is a review of the news: both what gets media attention as well as new offerings by plan sponsors.

Many employers have begun offering employee wellness benefits to their student and intern workers. Yet, some elements of those wellness programs, such as financial wellness components around retirement planning, may not be available to interns. Employers that are plan sponsors may want to help their participants with retirement readiness and may encourage early active participation in a retirement plan.

Financial literacy has always been a crucial component of a secure financial future. However, each generation faces unique challenges and opportunities that shape their financial education needs. Now, as Generation Z enters the workforce, plan sponsors must recognize that financial literacy is changing yet again.

New recommendations from the federal government call for wider use of dashboards for retirement plan participants. But plan sponsors know that not all dashboards are created equal. Following tips on user experience from other industries can help sponsors craft dashboards that help participants be better prepared for their investment planning.

A handful of federal cases ruling in favor of plan sponsors on recordkeeping fees may provide important details on effective benchmarking. Sponsors may note that merely comparing fees between plans was not deemed a sufficient basis of comparison. Instead, comparator plans (for benchmarking) should include all services requested.

Plan sponsors play a critical role in helping employees secure their financial future. While retirement plans are often at the forefront of this effort, it's also important to consider other financial tools that can support employees' broader financial well-being. One such tool is the 529 plan, designed specifically for education savings.

REAL ID is making it really hard to open new accounts. The change in identity verification requirements may only impact not yet enrolled plan participants. Yet, for participants who may be opening multiple accounts (such as those who’ve moved or younger participants) the increase in requirements could deter their interest in enrolling in benefits.

Recent enforcement actions by the Department of Labor indicate an uptick in cases against profit sharing plans. Class action settlements show that plaintiffs continue to keep a watchful eye on retirement plan fee choices. A new report indicates that activist shareholder whistleblowers may be using more than 10% of the SEC’s enforcement budget.

In 2023, the job market underwent changes as it sought to recover from pandemic-related disruptions and grappled with the aftermath of the Great Resignation. The start of 2024 has brought significant changes in how temporary workers are classified and their eligibility for benefits, driven by the SECURE Act and the DOL’s recent ruling on independent contractors.

A new report by the National Institute on Retirement Security (NIRS) highlights that rise in interest in private pensions. Their report makes recommendations for private, non-union based, pension plans. Given an interest by public pensions such as CalPERS in how they manage assets to hedge risks, the NIRS recommendations indicate a change towards positively viewing pensions.

When it comes to hardship withdrawals, participants may focus more on what they hear and not what is in your plan. Plan Sponsors may want to pause and consider what participants hear versus what the new laws now permit.

Many Plan Sponsors balance their administrative concerns by approaching their various fiduciary and administrative responsibilities via checklists and project plans. Yet even these planning tools may fall short. Most of those approaches fail to address both administrative and analytical issues. A quarter by quarter approach may help create the right balance.

Over the last few years, employers took note of the role benefits played in recruiting employees. Some employers considered matching payments to student loans. But nearly half of employers have chosen not to adopt matching programs. And now several trends may show that hesitancy is warranted.

Recently, the IRS issued guidance on implementing section 348 (cash balance accounts). This guidance may hint at potential regulatory flexibility towards plan testing. Similarly, section 304 (automatic cash out of small accounts) could lead to flexibility in plan audits for small plans.

In the realm of employee benefits, change is inevitable. Sometimes, however, change comes in the form of cutbacks, which can be unsettling for employees. As a plan sponsor, effectively communicating these changes to your workforce is paramount. In today's landscape, where employees expect transparency and authenticity, navigating benefit cutbacks requires finesse and a departure from traditional corporate speak.

As corporate governance business processes become part of plan litigation, and because benefits may be an area ripe for budget trimming, management of employee benefits policies is attracting more attention. Caution is due in this area as AI systems create their own risks.