Professional service firms like architects and attorneys offer both opportunities and challenges for companies sponsoring a defined contribution (DC) plan trying to engage employees in their retirement. Because the workforce is so diverse with both younger and older employees, the messaging and plan design needs to also be diverse to encourage higher participation. On the other hand, the workers are more educated which can lead to better engagement as described by the benefits administrator at a small Long Island based architectural firm attending a TPSU program conducted at LIU.
The relatively new benefits administrator started at the company just as they were making a record keeper change which allowed her to familiarize herself with the plan and the provider making the transition easier. Like many HR professionals, she wears many hats including administering the healthcare plan so there were many “firsts” for her.
Participation is high because the company, along with their provider, conducts benefits orientations when each employee is hired which is key for a company that has employees in their 20’s and their 70’s common to many professional services firms. Because they are small, the benefits administrator makes sure that everyone knows they can come in to speak to her about the retirement plan.
Key takeaways from TPSU? Understanding her role as a fiduciary which will only become more important with the new DOL fiduciary rule set to be effective April 2017. Also, with the default deferral at 2%, she will look into auto-escalation and increasing the default.
Hear from University of Chicago professor Richard Thaler who, along with UCLA professor Shlomo Benartzi, ushered in the Ideal Plan about which enables employers to increase savings through auto-enrollment at 6% and auto-escalation at 1% annually up to 12%. Not mentioned is the importance of helping people save more so they can actually retire, especially at professional services firms where employees can work longer as discussed at another TPSU program.
