Boosting Retirement Confidence with Auto-Enrollment
In the retirement world, many employees still struggle with feeling confident in their financial preparedness for life after work. According to the Employee Benefit Research Institute’s 2023 Retirement Confidence Survey, confidence levels have experienced a notable decline compared to 2022, reverting to levels last observed in 2018. In this year’s survey, only 64% of workers report feeling at least somewhat confident about their retirement prospects, with a mere 18% expressing a high level of confidence.
To address these concerns and help employees regain their confidence, one effective approach for employers is the implementation of auto-enrollment strategies combined with an employer match. This proactive measure not only simplifies retirement savings but also provides a powerful incentive for employees to participate and contribute to their retirement plans. By offering these benefits, employers can play a pivotal role in enhancing their workforce’s financial security and confidence in the journey toward a comfortable retirement.
At the conclusion of The Plan Sponsor University (TPSU) Fiduciary Education Program held on the campus of The University of Denver, Fred Barstein, founder and CEO of TPSU, interviews Holli, a benefits specialist working at a financial institution. Holli discusses their company’s approach to retirement benefits, including auto-enrollment with a 30-day opt-out period, starting at a 3% contribution level with an immediate match from the employer. She notes that despite some variation, most employees participate in the program, and the immediate vesting has a positive effect on retention. Additionally, Holli also emphasizes the value of financial advisors in helping employees understand the importance of financial freedom and not just retirement savings.
Read the Full Transcript Here:
Fred Barstein:
Greetings. This is Fred Barstein, CEO and founder of TPSU and 401KTV. I’m here in Denver where we just completed a TPSU program at the University of Denver, and I am here with Holli.
Holli:
Yes, Holli.
Fred Barstein:
Welcome Holli.
Holli:
Thank you.
Fred Barstein:
Okay if we ask you a few questions?
Holli:
Sure. Yes.
Fred Barstein:
Okay. Before we do, tell our audience a little bit about yourself.
Holli:
Again, my name is Holli. I work for a financial institute, a bank, and I am a benefits specialist. And I not only help in the benefits health wise, but also retirement for wealth.
Fred Barstein:
Great. So one of the things you talked about was how you’ve designed your match and how it’s working. So can you tell us about that?
Holli:
Yeah. What we do is we do auto enrollment. We give them a 30 days to opt out, but most don’t, on a percentage, and then it starts at 3%. And then we automatically, that same time, 30 days, we go ahead and match too. Even if they were to opt out during that 30 day window, we would still do our match. We will still-
Fred Barstein:
Do you have a lot of people opting out?
Holli:
It varies. We’re finding it’s going up a little bit. We think that has more of a generational thing.
Fred Barstein:
Sure.
Holli:
And then a lot of what’s going on in the world and more debt reasons. But generally, everyone pretty much goes with their 3% and then our match.
Fred Barstein:
So what’s the effect of the immediate vesting then? What’s a reception?
Holli:
It is a retention. We find, especially even with young people because we were kind of worried how is that retention?
Fred Barstein:
Right.
Holli:
But for some reason with that auto enrollment, they automatically see the impact on that payroll, immediately. And they’re comfortable with it. They get it. And then they see our match and so they just-
Fred Barstein:
Makes them feel good?
Holli:
Yeah. And we’re seeing that they are staying.
Fred Barstein:
So, final question. A couple of things you learned here and would you recommend the TPSU program?
Holli:
Oh, very much. I think the big thing I’ve learned is on the advisor side of how much they can help us retain our employees. We use our advisors big time, but to know that they know the trends, the current trends, the current laws, but also how the world is changing. It’s not as much about accumulation of wealth, but how do we get someone to start very early to understand that that’s a payroll at the end of their life. Financial freedom and not just retirement.
Fred Barstein:
Right.
Holli:
That’s what I learned.
Fred Barstein:
Having an expert, somebody who knows what they’re doing, makes all the difference.
Holli:
Yes, yes. It really does. We alone could not do this.
Fred Barstein:
Right.
Holli:
Yes.
Fred Barstein:
Well, thanks for your time, Holli.
Holli:
Thank you.
Fred Barstein:
And thank you for watching 401KTV. Please stay tuned for more videos like this.
