In 1875, the American Express Company established the first private pension planin the United States. It wasn’t until 1978 – over 100 years later – that the US Congress laid the foundation for the first defined contribution plan by passing The Revenue Act of 1978; The Act’s Section 401(k) put the wheels in motion for establishing defined contribution plans. (Yes, we can thank Congress for the term we’re all familiar with.)
Certainly, the century between the first defined benefit plan and the first defined contribution plan saw revolutionary changes within working America as the US emerged as an industrial power and the labor movement strengthened. Still, the changes we’ve seen since the late 1970s have been dramatic in their own way. A plan sponsor still clinging to standards from the early days of 401(k) plans and not evolving with employee and industry expectations would indeed be considered outdated.
Why is it important for plan sponsors to stay updated on workplace retirement plan standards?
- Demographics: People are living – and working – longer. The days of a gold watch, plaque and retirement lunch at 65 are gone.
- Economics: Pension plans are not as prevalent as in the past. Employees are shouldering more responsibility for their retirement savings. Additionally, many Americans have Social Security concerns, particularly regarding the long-term solvency of the program, especially with fewer America workers paying into it as birth rates decline.
- Expectations: Today’s employees are more sophisticated than ever before when it comes to wealth management. They expect an elevated employee benefits program offering multiple solutions and enhanced support.
- Innovation: As new technologies and investment options come to market, employees look for additional service capabilities and investment opportunities.
- Knowledge Base: Investors have broader access to information surrounding retirement planning standards and deliverables.
- Compliance Standards: In a post-Regulation Best Interest landscape, plan sponsors lacking the resources to adhere to ever-evolving regulatory compliance standards run the risk of running afoul of regulators and compromising their reputation.
How can plan sponsors ensure they are delivering an optimal platform and elevated experience to employees? Work with a partner possessing all of the capabilities that provide a solid foundation for a living plan, as well as the nimbleness to pivot as expectations and requirements change:
- Investment experience
- Due diligence capabilities
- Retirement plan consulting expertise
- State-of-the-art technologies
- Proprietary processes
- Regulatory insights
- Human capital to support an evolving environment
Importantly, working with a firm that has the financial stability, time-tested results and commitment to client satisfaction can be the difference between creating a program that attracts and retains high-quality employees and one that cannot.
SageView brings over three decades of expertise to every plan sponsor relationship. Contact usto find out more about the wide array of service and support we provide to the plan sponsors that work with us.