Editors note: This week, EBN runs a special series on what benefit decision-makers can expect in 2015 in five key areas: health care, retirement, wellness, voluntary and attraction and retention. Join the discussion on LinkedIn, Facebook and Twitter, using the hashtag #2015outlook.
2015 will usher in an organic shift among employers toward devoting more mind share to retirement programs. Employers can spend more time on retirement because theyre starting to figure out health care reform, says Doug Fisher, senior vice president with Fidelity Investments.
As the DC plan becomes the primary retirement vehicle and employers address their health plans to mitigate the effects of the Cadillac tax, employers are bringing health and retirement together. Employees have to make a health care decision, a health savings decision [with an HSA] and they have to make a retirement decision, and many of those decisions involve the same paycheck, says Fisher. It can be very confusing if youre not providing the right tools and guidance to integrate those decisions.
Also see: HSA accounts continue to grow
Only 1% of the organizations that offer DC and health savings account plans set their contributions in an integrated fashion, according to Towers Watsons recently released North American defined contribution plan sponsor survey report. In addition, of the employers that offer both plan types, just 19% educate workers about the wealth accumulation benefits of saving through the DC plan instead of the HSA.
Fisher sees a trend toward a simplification of investment funds in 401(k) plans, either through lowering the number of options available or adding managed accounts and target-date funds. Employees are generally not appropriately invested, he says.
Indeed, more than two in five companies (43%) have streamlined their investment offerings in the last five years with a strong bias toward continuing to decrease their options in the next 12 months, according to the Towers Watson report.
Retirement readiness will also be a theme in 2015, with 78% of employers surveyed by the consulting firm saying retirement readiness has become a top issue for their employees. Additionally, 82% say retirement security will become a more important issue for employees in the next three years.
Besides typical auto features, which might not move the savings needle enough, some employers are planning to do more employee education about savings and investing, says Robyn Credico, defined contribution practice leader, North America, at Towers Watson. She encourages plan sponsors to rethink how they deliver that information in 2015.
Not a lot of employers use mobile apps and other types of communication methods that younger people might relate to, she says. Maybe even change the method of communication to be more specific to a given populations needs. Dont assume everyones the same and theyre going to act on the message the same way.
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