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Retirement Plan Goals Should Mirror Corporate Goals

Retirement Plan Goals

Retirement Plan Goals Should Mirror Corporate Goals

Retirement plan goals and strategies supported by good plan design will make a significant impact on participant outcomes.  Plan sponsors should consider aligning the retirement plan goals with successful retirement strategies to achieve the firm’s organizational goals.  This should include maximizing retirement plan effectiveness, according to a recent article from Smart Business.

Retirement plan goals and effectiveness starts with plan sponsors thinking about the plan’s objectives in the context of the company and participants. Sponsors often make the mistake of implementing a plan with only a general idea of what they want to achieve. However, sponsors should be specific about the plan’s goals, and again, how they fit with the organization’s “big picture” objectives.

According to the Smart Business article, sponsors must determine from the start why they want a plan and what they hope to achieve. That’s because plans implemented without specific retirement plan goals tend to fall short in key areas. This includes fiduciary governance, the investment lineup, participant engagement, and participants who are unable to realize the full benefits of the plan because they do not have the knowledge or understanding to do so. Another hallmark of retirement plan effectiveness is participants who are well-educated on the plan’s tools and resources.  Administration is another area where plans can fall short.  If not implemented correctly, poor administration can result in a plan having internal or external issues with service providers that can be costly to fix.

What’s a plan sponsor to do? For starters, work with a strong plan advisor, who can be helpful on areas such as plan design, overall retirement plan goals, and investments. Retirement plans are complex, and product and service offerings are changing all the time. By working with a well-informed advisor, sponsors can stay up to date on the latest and greatest offerings available for their plan, and get help making critical decisions about which features, and services may provide the most value for the plan and participants at a reasonable cost.

Moreover, sponsors should review their retirement plans annually, at a minimum. In doing so, consider the following: Fiduciary responsibilities — have they been met? Is the investment menu performing in line with the goals set forth by the committee in the plan’s Investment Policy Statement (IPS)? If not, what actions should be taken? How is participant engagement? Are participants getting everything they can and should be out of the plan? If not, what changes should be made to improve?

In addition, annual reviews should reveal whether or not the plan is performing in line with its goals. For example, the Smart Business article offers these examples: “ If the goal was adding participants, did that happen? Was the purpose a higher average balance? Good investment performance? A plan that’s easy to administer? What progress, if any, has been made toward those ends?”

Finally, as Smart Business points out, annual reviews are an optimal time to review retirement plan providers to ensure they are still offering value in a way that helps the organization achieve its corporate objectives. If not, plan sponsors should consider what other providers are out there that may be a better fit for the plan and company’s objectives.

Keep in mind, of course, that company goals are specific, and therefore, no two retirement plans are exactly alike. Retirement plan goals should align with corporate objectives and be reviewed annually to ensure they continue to deliver value and meet corporate goals. If not, some changes may be in order to ensure coordinated retirement plan goals and corporate objectives.


Robyn Kurdek

Robyn Kurdek

Freelance writer with nearly 2 decades of financial industry experience, with niche expertise in the defined contribution (DC) industry. I also have defined benefit (DB) plan knowledge. I write all types of content for retirement plan participants, sponsors and advisors, including web copy, newsletters, white papers, fact sheets, blog posts, financial wellness articles, and more. "I speak DC."
Robyn Kurdek

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