Plan Sponsors Offer Tips for Retaining Retirees

Sponsored by: MFS Investment Management

There have been some recent articles discussing how more plan sponsors are encouraging participants to keep assets in the plan, and a discussion as to whether plan sponsors have enough investment options geared specifically towards those participants. We asked about this issue a few years ago and at the time, three quarters of respondents did not encourage retirees to stay in the plan. I was curious if this has changed and if plan sponsors are adding investment options specifically designed for these participants. Only twelve percent of respondents stated they actively encourage participants to retain assets in the plan, while two-thirds state they are neutral on the topic – they provide education on options but don’t encourage either way. Thirty-six percent of respondents indicated that they have investment options geared specifically towards participants retaining assets in the plan. Comments follow.

Comments

• Balances under $7,000 mandatorily transferred to IRAs with the same retirement vendor, balances over $7,000 can remain in the plan and retirees can set up installment payments
• Biggest concern is losing contact with them so they do not get their notices.
• Bonds, stable value fund, income fund (TDF) once mature and have brokerage account purchase CDs
• company loyalty seems to keep our retirees in our plans
• Diverse portfolio and options for retirees to maintain their investments and payment options to help with budgeting.
• Fairly new 401k plan (10 years)  and company (20 years).  Only 2 retiree's to date.
• Greater administrative burden, so encourage transfer out when retire/leave.
• Institutional share class fees vs. retail class fees.
• Most retirees with larger balances seem to keep their assets in the plan
• No difference in options for active participants!
• Our plan is fairly new. We don't have anyone who is nearing retirement, so we haven't planned for that yet.
• Our target date funds are based on a through versus to retirement approach.  We have stable value, and fixed income choices that support those in retirement.  Our plan distribution options allow for partial withdrawals and various installment options.
• Participants are finding target date funds in our plan attractive and fees are less than they would pay in an IRA.
• Prefer for plan participants to be active employees. Non-active do not pay attention as much to communications, education, changes, etc.
• Retirees generally start in-service withdrawal and transfer assets out of the plan.
• Same investment options but inactive employees pay a quarterly account maintenance fee
• The option to live on Social Security and DELAY withdrawing assets is an option that we provide
• They are told that keeping investments in the plan is an option, as long as we have a current contact information on file. We also provide information on how to roll it over to another plan.
• We are in the process of setting up some options via Fidelity.  We will have three options -- 1) Personalized Planning and Advice, 2) Flexible Withdrawal Option and 3) Guaranteed Income Marketplace.  Every option is not right for everyone.  We want to provide choice and we want employees to see this as a benefit.
• We are neutral in terms of retirees keeping assets in the plan. We offer a core line-up with low risk investments and also a self-directed brokerage window with money market funds. We also offer managed accounts with Income+ to help retirees create an income stream in retirement. Installment payments are also available under the plan..
• We do not either encourage or discourage retirees to keep funds in our company plan.
• We don't actively encourage/discourage but do encourage retirees to seek advice from an advisor in their individual approach to retirement.
• We don't currently have retirees in our population.
• We encourage participants to compare fees when considering a rollover from the plan, as our plan offers an extremely competitive fee structure due to the amount of plan assets. Options include a retirement target date fund, money market, and stable value fund. Annuity options are also available outside the plan.
• We have a pension option that people can pay into to have retirement income.
• We have an attractive plan that covers most fees, so retirees have no reason to withdraw funds.
• We have bonds, stable value, money market, TDF but not annuities. The payment distribution options are also not as flexible as they could be.
• We try to encourage anyone leaving the company to move their assets out of the company plan.
• We try to share pros and cons of keeping the assets in the Plan versus rolling into an IRA.
• We would prefer they move their assets to personal accounts, to minimize our expenses