For plan sponsors, it's a time to look at how they can help employees who were hard hit financially by the pandemic.

Where should you start?

Unappealing though it may be, take a look back at 2020. Employers can leverage their DC plan data to analyze participant activity and determine whether the pandemic altered participant behavior: Did the rate of savings go down? Was there an increase in loans? Did you see more in-service withdrawals? Each of these indicators can help you determine possible actions.

Decreased savings rates

Sponsors can encourage participants who have suspended contributions to the plan to try again. The amount saved from each payday has a significant impact on how much retirement income will be available.

A key message is to encourage your members to start with whatever they can: Even a little bit helps. To bolster this message, offer suggestions like slowly increasing contribution levels through 2021 and 2022, which will help them get back "up to speed" with their savings goals. Explain the options they have for pre-tax savings, Roth savings (where contributions are taxed, but qualified distributions are completely tax-free), and non-Roth after-tax savings (where contributions are taxed immediately, but earnings are taxed upon distribution).

Some participants may have gotten out of the market altogether, given fears of volatility. Don't duck the issue. Fear may keep participants from saving even though they know they should. While plan sponsors naturally and appropriately want to stay away from giving advice, you can certainly provide context around how markets rebound so participants can keep things in perspective and not panic with their investments. And you can remind them that trying to time the market is never a good idea.

If you suspended your matching contributions during the pandemic, and have now reinstated them, don't be shy about using the match to entice employees and participants who have suspended their contributions, to start up or "re-up," reminding them there are employer incentives for saving in the plan. While you're at it, offer tips and tactics they can use to maximize the employer match.

Also, if recordkeeping fees are paid by the participants in your plan, consider offering temporary relief by covering the cost of plan administration. In response to the pandemic, many recordkeepers provided fee relief on loan and withdrawal transaction fees. During this fee relief window, recordkeepers credited these fees back to a participant's account when they requested loans and/or withdrawals.

Increased loan and in-service withdrawal activity

Which brings us to loans and withdrawals. Plan sponsors will have to send certain communications as a result of actions employees took based on the CARES Act. Loan repayments will restart, and repayment amounts may change. Also, remind participants they can either pay back the withdrawal or spread the tax on the withdrawal over a three-year period from the year they took the distribution. This offers some peace of mind as it will help lower the tax burden.

There are some changes to retirement plan designs that can help encourage getting back on track.

• Does it make sense to reconsider the employer contribution formula to see if it's right for 2021? Perhaps consider raising the level of the match on participant contributions from 6% to 8% for example, so you can encourage them to save more. As we know, the experts recommend employees should strive to save between 12% and 15% (this includes employee and employer contributions), to set up a financially healthy retirement.
• Maybe it's time to review your eligibility provisions – for example, does that 60- or 90-day waiting period fit today's reality?
• Look at your lower-wage income earners and consider a non-elective employer flat-dollar contribution targeted to them as an alternative to a percentage of pay.
• Don't forget the obvious: auto-enrollment and auto increases. But you can also consider "retro-enrollment" – reaching out to current employees and participants who are not saving.

Helping employees to replenish their savings

Many participants have become used to the extra dollars in their paycheck and may forget to re-up in 2021, even though they may now be able to afford to do so. Reminding them of the benefits available to them is an ideal way to re-engage them in the plan. Finance is complex, and not easy for all to understand. Offering financial planning services, which may already be provided through the EAP, will go a long way to answering their questions, as are the resources of your recordkeeper.

Every communication is an opportunity to remind people of some key home truths—dollar-cost averaging, diversified savings, inflation, compound interest. It's important to show your employees how saving on a pre-tax basis lessens the impact on their take-home pay. And no one can make financial decisions in a vacuum. Sponsors need to provide the bigger picture, keeping in mind what else employees may be facing, such as their new (perhaps increased) healthcare contributions for 2021, restarting their loan repayments following their request to suspend repayments in 2020, and the many other demands on their wallets.

The overall context of the messages is that even though there are pressing and legitimate financial concerns right now, it's still important to save what you can on an ongoing basis as a step to a secure future.

Finally, make your communications engaging. Employees don't have a lot of time to read this stuff, so keep things short, sweet, lively, and topical with real-life, kitchen table examples. Don't always rely on words alone; get their attention with graphics and visuals (simple or intricate, graphics are magnets for the attention). And of course, make your messages something people can take action on.

After the turmoil of last year, we all desperately need a sense of hope as we head into 2021. For too long, people have been focused on the here-and-now, which has been shifting under our feet practically every day. It's time to raise people's sights again and look to the future. For plan sponsors, now is the perfect time to help employees and participants reshape their financial goals and jump start their path to retirement security.

Sandra Pappa is principal consultant in the Wealth practice at Buck. Sandy has over 30 years of experience in retirement benefit consulting. She helps clients align their retirement program with their overall workforce and business strategy while maintaining an administratively and operationally compliant program.

Elizabeth Woodburn is a director in the Engagement practice at Buck where she helps employers to communicate with employees about their benefits programs, plan designs, changes and how to engage employees with health and wealth and career offerings.

Read more: 

• 4 big trends in 401(k)s, retirement plans
• More workers want financial advice as pandemic sharpens desire for security
• New year, old fears: Women still struggling with financial concerns