Sponsors of defined contribution plans are being advised tooffer more than just a retirement plan, according to consultingfirm Mercer.

This is in the wake of a study that indicates DC plans justaren't adequate to meet employees' broader financial needs,especially in an “evolving, volatile market.”

The survey, Inside Employees' Minds, indicated thatyounger employees are more concernedwith current financial challenges and making ends meet rather thansaving for retirement.

Read: The hot new employee beneft: Help with sudentloan repayment

A mere 10 percent of millennials are worrying about retirement,whereas nearly 30 percent of boomers are worried about retirementsavings.

And they have good cause to worry: Many people approachingretirement have debt levels that will be a drag on their retirementincome.

“All these findings demonstrate that employers need to considerbroader financial wellness rather than only employees' andretirees' ability to achieve a target income replacement ratio,”said Betsy Dill, financial wellness advisory leader, Mercer.

Dill added, “No longer can we only push the 'contribute more orelse' agenda because many individuals dealing with immediate needsfeel they have to focus more on reducing debt than they do onmaking extra retirement contributions. Employees will receive farmore value from receiving help in making the best decisions to suittheir own financial circumstances—not necessarily focusing solelyon their retirement plans.”

Mercer will further explore the topic in a webcast on January14.

Here are 10 questions Mercer says that plan sponsors need to askabout their current retirement and financial offerings to theiremployees.

1. Are the programs offered to helpemployees address their financial needs understood andused?

Mercer points out that, although many large employers provideadditional financial aids such as access to financial advice, toolsthat calculate retirement income, algorithms to recommend assetallocations, health advocacy for dependents and parents, and arange of voluntary benefits, many of these options areunderutilized.

Employers need to assess which employee segments would benefitfrom these programs and how to connect those employees to benefitsin optimized ways.

2. How different is the retirement experience of men andwomen likely to be in the company?

Women face workplace challenges that include lower salaries,more employment gaps, and longer lifespans, as well as retirementbalances typically 30–40 percent lower than those of men.

Employers need to use analytics to understand these differencesand develop targeted communication or support strategies to addressthese realities.

3. Is the existing investment lineup working foremployees?

Employers should review their analysis of the retirement plan'sparticipant demographics and investment behaviors and assess howappropriate the current investment lineup is for participants.

For example, custom multimanager options may provideparticipants access to greater diversification without addingcomplexity to the investment decision-making process.

4. Does the current retirement plan maximize taxefficiency—and do employees understand what thatmeans?

The youngest employees in a company's workforce couldpotentially benefit from Roth contributions, rather than from apretax election.

In addition, the ability to offer in-plan Roth conversions canincrease opportunities for tax diversification and efficiencies,especially in combination with traditional after-taxcontributions.

Employers need to consider what makes sense for their plan, andthen be sure that employees have access to information that allowsthem to understand the current landscape.

5. How appropriate is the plan's default investmentalternative?

In September, a Government Accountability Office reportemphasized the importance of selecting and monitoring theretirement plan's default.

It also acknowledged many of the challenges plan sponsors faceduring that process.

Employers need to be sure that their plan's default is still agood fit for participants by analyzing participants and theirneeds.

6. What challenges arise from having retirement assetsin multiple places?

Having all retirement balances consolidated in a single locationcan make managing retirement assets less complex for workers.

In addition, in-plan investment fees are typically far lowerthan those individuals must pay.

If employers are not already encouraging employees toconsolidate retirement balances into their plan, they shouldconsider it—particularly since higher assets within a plan drivedown costs for everyone, through economies of scale.

7. When was the plan's capital preservation option lastreviewed?

The second round of money market reform will take effect nextOctober.

Recent reforms have not only reduced expected returns and madethem less customer friendly, they've also caused potentialimplementation challenges for DC plans.

Plan sponsors should consider whether a money market fundremains a suitable option or whether other alternatives—such asstable—better meet objectives.

8. Are participants being helped to make betterdecisions at retirement?

“At retirement” optimization can provide significant benefits toretiring participants.

This includes making Social Security elections, medical coveragedecisions, tax optimization, and decisions on when to draw fromwhich retirement product.

9. Are environmental, social, andgovernance (ESG) factors a consideration for the investmentlineup?

Younger participants in particular are interested in what isincreasingly becoming an issue within retirement plans:sustainable investing.

Recent U.S. Department of Labor guidance hasclarified the use of ESG factors in selecting plan investments.

Potential responses can range from explicit responsibleinvesting/impact investing options to the consideration of ESG as akey factor in the selection of investment managers.

10. Are loans truly deteriorating the financial wellnessof participants?

While it's true that participant loans can be a drag onparticipants' retirement readiness—something that plan sponsors areconcerned about—sometimes the alternatives, such as credit carddebt or payday loans, can do far more damage.

While it's important to monitor loan activity, plan sponsorsmust understand the reasons behind the need for participantloans.