Are You Getting the Most Out of Your Retirement Plan?

OCTOBER 1, 2024

In today’s competitive labor market, employers are scrambling to enhance benefit programs to attract and retain top talent, while also pursuing strategies to reduce employee benefit costs.

Retirement plan design is an often-overlooked area that can have a huge impact on employees’ ability to retire in a timely fashion — which has the downstream impact of significantly reducing overall benefit costs. Reviewing your retirement program provides an opportunity to ensure your plan design aligns with your organization’s culture and objectives.

Key Plan Design Considerations

Employers are under increasing pressure to offer a retirement program that is competitive, helps improve employees’ retirement readiness, and sets them apart from other employers when recruiting or retaining employees. With these key objectives in mind, employers should consider several important factors when determining a retirement plan design to meet their organization’s needs:

• Matching contributions
• Impact of automatic enrollment and automatic escalation features
• Profit-sharing contributions, including enhanced options such as new comparability, which allows for different contribution levels to different groups of employees
• Alternative plan designs, such as defined benefit and nonqualified defined contribution plans
• A plan design’s potential effects on nondiscrimination testing
• Whether refunds to highly compensated employees can be avoided by using safe harbor or qualified nonelective contributions

For organizations that offer a pension plan, current market volatility and interest rates require a careful review of the plan’s funded status to determine if freezing or terminating the plan makes sense.

Plans That Fit for Today and Tomorrow

The retirement plan design consulting services offered by USI Consulting Group (USICG) include evaluating your plan for marketplace competitiveness and developing a plan design that fits your organization today and well into the future.

Our plan design experts provide behavioral finance insights and employer contribution analyses to help employers design cost-effective plans that assist plan participants in reaching retirement goals. Through the design process, USICG presents benefit and cost modeling that includes alternative contribution formulas.

Our proprietary benchmarking review of competitors’ plans and industry averages is the first step in the plan design process. This review leverages our database to benchmark and analyze required plan services and fee competitiveness. We identify the pros and cons and quantify relative costs to help you understand your options, and we build in as much flexibility as possible so that your plan can easily adapt as your business grows.

Case Study: Reduced Costs, Increased Participation

In a recent case, USICG worked with an organization to better align its 403(b) and 401(a) plans with the goals of increasing plan participation, alleviating administrative HR tasks and reducing plan costs.

After carefully evaluating the client’s plans, USICG consultants implemented a set of comprehensive solutions to achieve the company’s objectives. The results included:*

• Instituting a re-enrollment strategy, which almost tripled the plan participation rate
• Completing aggressive fee negotiation that saved plan participants nearly $100,000 in retirement plan recordkeeping expenses in year one
• Shifting administrative tasks from HR to the recordkeeper, saving the HR staff countless hours of plan administration