Retirement Consulting Insights
Elevate Your Retirement Plan Design With Benchmarking
JULY 5, 2023
If your retirement plan design isn’t stacking up to your competitors’ plans, it may cost your organization through employee turnover and workers who fail to retire on time. These can add up to millions of dollars annually.
A benchmarking review can provide an opportunity to optimize your 401(k), 403(b), or 457 plan design and implement “best-in-class” features that meet your organization’s needs and objectives.
Poor Plan Design Costs Employers
Comparing your retirement plan’s details to those of other companies is an important fiduciary practice to comply with the requirements of the Employee Retirement Income Security Act, or ERISA. Understanding and evaluating plan fees, investment expenses, investment options and services is an essential fiduciary responsibility, and benchmarking can help you complete due diligence, while ensuring your plan’s design:
Poor plan design results in employee turnover and delayed retirement. Those costs can be significant over time, as replacing an employee can cost one and a half to two times the worker’s salary.
Studies show that for every worker who delays retirement because they’re not financially prepared, it costs an employer an additional $50,000 per year due to increased healthcare expenses, lower productivity, and higher salaries.1 If just 15 workers delay retirement for three years at a company with 500 employees, it will cost the business an estimated $2.25 million.
Optimizing your plan design can enhance employee satisfaction and lead to higher retention rates, increased plan participation, and fewer delayed retirements. These amount to greater savings for your organization.
Benchmarking is Key to Achieving Plan Goals
USI Consulting Group (USICG) uses proprietary analytics in our Plan Design Benchmarking Study services, comparing your retirement plan against others in your industry, geographic location, etc. USICG’s benchmarking process combines information from more than 4,000 retirement plans with industry-specific data and third-party comparative data to generate a robust comparison.
Through the benchmarking process, USICG’s plan design experts review and analyze an extensive number of data points from a client’s plan, then make recommendations. Pros and cons are listed, along with relative costs, to help clients understand the plan design options. USICG’s team guides organizations to implement “best-in-class” features to improve employee participation, pricing, technology, investments and services.2
Case Study: Benchmarking Increases Plan Participation by 34%
Optimizing retirement plan design can result in a variety of advantages for your company. USICG’s proprietary benchmarking analysis can dramatically increase plan participation, improve returns, enhance employee recruitment, reduce turnover, and keep workers on track for retirement.
One USICG client with 600 employees and limited HR staff used the firm’s benchmarking expertise to increase their plan participation, which was hovering around 64%. USICG consultants conducted a benchmarking study and recommended implementing automatic enrollment at 3% of salary for employees not participating in the plan, as well as adding an automatic contribution escalation option for those participating. Unless the employees opted out, they would be on the path to retirement.
After this plan design change, the organization had a 34% jump in participation, with 98% of the workforce enrolled in the plan.3
How USI Consulting Group Can Help
USI Consulting Group’s consulting services include evaluating your retirement plan for marketplace competitiveness and developing a plan design that fits your organization today and into the future.
To learn how we can help you optimize your plan’s design, minimize costs, and enhance employee satisfaction, please contact your USICG representative, visit our Contact Us page or reach out to us at information@usicg.com.
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1 Prudential, 2019
2 Investment advice provided to the Plan by USI Advisors, Inc. Under certain arrangements, securities offered to the Plan through USI Securities, Inc. Member FINRA/SIPC. Both USI Advisors, Inc. and USI Securities, Inc. are affiliates of USI Consulting Group.
3 Actual results will vary. The use of any stated benefits in this case study is intended for illustrative purposes only and may not be used to predict or project future results.
This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1023.S0621.0051
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