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Remember Employee Pressures, Matches in the New Year

Not many clicks of the clock are left before 2017 begins. Resolutions are a traditional part of the new year, and recent suggestions from several financial management and consulting firms highlight some steps that plan sponsors can take in 2017.

Remember that absent action by the incoming Trump administration, the Department of Labor’s fiduciary rule will be applicable soon. According to BenefitsPro, consulting firm Mercer suggests that plan fiduciaries should keep track of vendor services, whether they are appropriate and how they may change due to the rule.

Keep in mind that employees and plan participants face financial challenges that affect their ability to save for retirement, Mercer suggests, and that helping them better address those challenges will bolster their financial readiness to retire. Not only that, they should consider the needs and behavior of nonparticipants and why they don’t participate in the plan.

Retirement plan service providers may be interested to know that Mercer suggests plan sponsors consider whether student loan repayment should be included in their defined contribution plan design. The pressure that student loan repayment put on employees should not be underestimated, Mercer suggests, arguing that many employees are so much more concerned with them that they miss out on matching retirement plan contributions from their employers. Charles Schwab concurs regarding the effect of that concern, and argues that employees should overcome it and make obtaining the highest match possible a higher priority than paying off debt and loans.

Schwab reminds employees that failure to participate in the plan means forgoing a matching contribution if it is offered, and that those who are participating may not be contributing enough to take full advantage of what could be theirs through the match program.

And not only employees lose sight of those matching contributions, Mercer suggests. They also propose that plan sponsors examine how effective their matching programs are and consider how they may need to be revised.