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Defined contribution plans could use some work from plan sponsors, according to a new report from Willis Towers Watson, specifically in the areas of financial well-being, investments and compliance, if they're going to be the most help to employees in 2020 and the years to come.
According to the report, while plan assets are definitely on the rise—having risen "about 90 percent between 2007 and mid-2019," and are projected to continue to increase—plans themselves need an assist if they're to provide the greatest benefit to participants.
1. Design plans to address employee financial stress
When it comes to financial well-being, the report says, employers need to evaluate the level of financial stress under which their employees are working. If they don't know the areas giving workers the most trouble, they aren't properly equipped to help out in ways that will be of the most help.
They also need to consider providing the tools and even financial coaching that will enable employees to make better decisions and achieve their goals. Tools that nudge them toward the right decisions, rather than decreeing objectives that may be unobtainable, and coaching that doesn't "judge" employee choices can help guide them toward better—and more achievable—objectives.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
