Will Cuts to SS Change Plan Designs?
This quarter sponsored by: Nuveen, a TIAA company
There has been some talk in the media of Social Security benefits being cut in 2033 is the system is not shored up. Reports say the benefits would face a 23 percent reduction in benefits across the board – more than $17,000 for a newly retired couple and $13,000 for a single new retiree annually. Though the Social Security “crisis” is not a new one, and some think it will be fixed, we wondered, if there was a drastic cut to Social Security benefits, would plan sponsors pivot to try and help employees make up for the cuts? Though plan sponsors are probably not making plan design changes 10 years out for a “possible” problem, we wondered if this was on companies' radars and if cuts to Social Security could or would impact plan designs.
Unsurprisingly, nearly 40 percent of respondents are unsure though 31 percent said they would not make any plan changes to compensate for a decrease in Social Security benefits. Just two percent of respondents think their company would increase contributions, and 28 percent would encourage participants to save more. Comments follow.
- Our current design would not change, but, those in that age bracket should consider speaking to a retirement specialist to possibly readjust witholdings.
- No, we provide a very generous benefit that allows an employee to save 15% of their income
- We would definitely encourage our participants to save more
- We would love to increase the match but it won't be due to the expected reduction of Social Security benefits.
- It's hard to take these projections too seriously at this point. Should those who are retiring now prepare? Will Congress get their act together and actually do something productive about it in advance? It's hard for me to focus on this question with all the other crazy going on.
- As a nonprofit, we would have to base the decision on our funding at the time. Too far out to forecast.
- Don't believe so it depends on the communication and level of understanding for our workforce
- I don't think reducing Social Security benefits is likely unless we are in an extremely bad economic condition.
- I hate to admit we have not contemplated this yet. We're still focused on current activities and as we currently do would benchmark our design to others.
- I'm sure we will be looking at options if and when we know this is actually going to happen.
- Management would need to have discussions on this.
- Not a fan of reduction happening. But would like to hear about ideas on how to help employees navigate and save more.
- Not sure what our situation as a company will be in 2033
- Think we would increase participant required % and hopefully employer match %
- Unsure. Too many other things to think about right now!
- We have a profit sharing plan that contributes 10% so doubt we will modify.
- We have not waded into this discussion, but at a minimum, we would encourage participants to save more.
- We would have to wait and see. A lot can happen on the regulatory front in 10 years.
- We would need to further analyze the impact any expected SS benefit reduction would have on our employees' retirement goals. We may expect employees to increase their contributions, but we are not certain we could bear the cost of increasing any employer matching contributions.
- Basic financial principles and economics dictate the necessity to scale back social security benefits. As an inevitability employers & employees need to plan, do more to adjust.
- Depends on the amount of the reduction
- I am unsure if we will be in a position at that time to increase the match but we would encourage participation.
- I think it's sad, but true.
- There would be pressure to increase the match in an uncertain economic environment