Plan Sponsor News

In the same way that you’re feeling the pinch of inflation every time you pull out your wallet, so, too, are your employees. Although we all may need to get creative to stretch our money in the face of higher prices, it’s important to steer your employees away from making big decisions that they may later regret—like reducing their plan contributions or putting off saving for retirement.

Higher inflation is playing a role in how workers think about retirement. Among workers who report that they’re less confident about their ability to live comfortably throughout retirement, 35% cite inflation as their biggest concern, according to the 2022 Retirement Confidence Survey conducted by the Employee Benefit Research Institute. Meanwhile, 50% of retirees cite inflation as their biggest reason for feeling less confident.

Because inflation is a major concern related to retirement, now is a good time to educate your employees about it and to remind them about the value of saving so they have enough money to retire comfortably. Periods of economic strain are opportunities for employers to rise to the challenge. Here are some ideas to consider:

If you offer a company match, increase the amount. Doing so can encourage employees to increase their savings rates.
Add an auto-escalation feature to your plan. On average, participants contribute only 7.6% of their compensation, so auto-escalation can help employees close their savings gaps while dramatically increasing deferral rates. Participants in these plans experience higher average account values versus those in plans without auto-escalation.^_*
Encourage employees to take advantage of financial education resources. You can also talk to your Mutual of America Account Representative for help.
Regularly communicate with your employees about any savings programs you offer. They can take advantage of these programs to save on everyday purchases.
Expand the nonmonetary benefits your company offers. These benefits can help your employees save money—for example, provide free food in the office or allow people to telecommute.

 *Source: Plan Sponsor Council of America, PSCA (2020). 63rd Annual Survey of Profit Sharing and 401(k) Plans.

Workers and retirees both expect their workplace retirement savings plan to be a source of income during retirement, but not to the same extent. While 82% of current workers expect income in retirement from their plan, only 47% of retirees expect the same, according to figures collected by the Employee Benefit Research Institute (EBRI) in its 2022 Retirement Confidence Survey.*

Not only could this disconnect in expectations for income result in disappointment when it’s time to retire, but some people may also need to return to the workforce if they don’t have enough money saved. The EBRI report may give employers some ideas to better prepare workers for what to expect in the future—and stay connected into retirement. Here are some of the highlights of the report:

Trusted adviser. Only 22% of workers report using their employer as a trusted source of information for retirement planning, ranking below family and friends (35%), and online resources and self-conducted research (29%). Only 13% of retirees cite their former employer as a trusted source of information.
Trouble accessing benefits. Among workers, 25% report they’ve had trouble accessing or utilizing employer-sponsored benefits for dependents or beneficiaries.
Plan satisfaction. Although respondents reported being satisfied overall with their workplace retirement plans (82%), the share who said they’re “very satisfied” fell to 31% in 2022, down from 39% in 2021.
Tools and calculators. Among workers, 60% reported that their employers offer information on their projected monthly income in retirement—of these, 90% said this information is useful. But 11% of respondents didn’t know if such tools were available.

With these findings in mind, work with your Mutual of America Participant Account Representative to set up participant education programs. By communicating some of the benefits your workplace retirement plan offers, your employees may see the value they’ll enjoy in the future by increasing their savings.

^*Mutual of America was a sponsor of the 2022 Retirement Confidence Survey.

Over the past few months, Mutual of America has been conducting a phased rollout of its new recordkeeping and administration platform. This is a major undertaking, and the new platform will give us significant advantages in keeping up with changes in the financial markets, financial technology, regulations, and shifting plan sponsor and participant demands. Its full-service capabilities offer plan sponsors everything from online document production to participant account maintenance, audit documentation, on-demand reporting, daily valuation and much more. 

In addition, participants will be able to:

• Receive enhanced quarterly statements with income projections 

• Change contribution rates online 

• Set automatic rebalancing and auto-escalation

• Use Mutual of America’s mobile app for iOS and Android 

• View customized personal rates of return 

• Establish self-serve transactions for loans and withdrawals 

• Debit loan repayments directly from their bank accounts 

As with any large-scale transformation, some functions, menus and processes may change. Your Mutual of America team is ready to guide you and your plan participants through this transition so you can make the most of all that the new platform has to offer.