BCG Blog - Sponsors

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.