What Employee Benefit Plan Sponsors Need to be Talking About
Published on by Kelsey Fender in Benefit Plan Audits
On June 7, 2018, Barnes Dennig and The Rinehart Sussli Financial Group hosted a group of experienced professionals for the fifteenth Annual Employee Benefit Plan Seminar. Given that retirement plans are a valuable tool for rewarding and attracting top talent, our goal is to help the business community stay up-to-date on the latest trends and regulations that may impact plan sponsors. The seminar included presentations centered on the following topics:
- Behavioral Economics, presented by Nick Sherman , Senior Employee Benefits Consultant of Fidelity Health Marketplace
- The Power of Human Resources, presented by Tim Ruge of Paycor
- Cyber Security, presented by Seth Marsh of Vigilant Technology Solutions
- Securing Retirement, presented by Douglas Peterson of Empower Retirement
- Avoiding/Surviving a DOL/IRS Plan Audit in 2018, presented by Mark Niziak, JD, AVP, ERISA Attorney of John Hancock Financial Services
- The Future of Retirement, presented by Jean Young of Vanguard Center for Investor Research
Nick Sherman educated us on the interplay of reason and emotions when it comes to helping employees make smarter benefit decisions. We learned that 9 out of 10 Americans lack health literacy, or “the capacity to obtain, process and understand basic health information…to make appropriate health decisions.” To help employers with this challenge, Sherman suggest that it is important to transition employees to a reason-based approach, rather than emotion-based, through four different tactics:
- Implement active enrollment
- Eliminate defined contribution plans healthcare plans
- Use treatment and transparency tools, as well as decision support tools (ex. “Guroo,” an online tool for finding data on health care costs and quality)
- Include an optimal number of plans
Since health plan choices can be complex and challenging, Tim Ruge explained the importance of establishing an “HR Center of Excellence.” By doing so, HR processionals can appropriately advise and inspire their employees through six pillars of excellence: recruiting, benefits, labor costs, people management, compliance, and employee experience. While all six pillars are important, Ruge explained how benefits motivate employees through an eye-opening statistic: “84% of employees with high benefit satisfaction report high job satisfaction.” Ruge suggested using an “Assess, Optimize, Excel” model in order to create a better work environment.
While it is important to have educated and satisfied employees, it is also imperative to protect employees by implementing cyber security. Seth Marsh reminded us that “everyone is a user and is on the frontline” of a cyber-attack. He also informed us that: “60% of small to medium businesses after a cyber event will be out business.” To avoid attackers and the dangers of the online world, Marsh stressed two things: make sure detection is invisible to the attacker, and choose value over price when it comes to installing a security system.
To emphasize the severity of cyber security, Douglas Peterson spoke next on the need to invest in information security because: “financial institutions everywhere are facing the constant threat of fraud.” Peterson stated that phishing is still the most successful method of attacking, typically occurring through email links and attachments. Below is a list of recommendations Peterson provided for plan sponsors regarding enhanced security:
- Provide security awareness training
- Share information about any compromises with your company’s security team
- Provide your company’s recordkeeper with accurate and up-to-date contact information for your participants
Additionally, plan participants can enhance their security in the following manner:
- Check your retirement account frequently for changes
- Be suspicious of email
- Do not reuse passwords on important sites
Switching gears away from cyber security, Mark Niziak presented next on the increasing frequency of qualified retirement plan audits by the IRS and DOL. He started off by stating the different focuses of each; the focus of an IRS audit is “operational compliance” with the plan document and the Internal Revenue code, whereas the DOL’s focus is “fiduciary and reporting/disclosure obligations.” Niziak informed us of the various factors that may trigger an audit, and the necessary measures companies should take to safeguard their plans. For example, failing to maintain internal procedures can be prevented by working with the “recordkeeper to establish internal controls for plan operation.” This can be accomplished by conducting periodic self-audits of the plan, or by having the plan committee undergo “fiduciary training.” Ultimately, staying proactive is the best way to avoid or survive an audit.
The final speaker, Jean Young, wrapped up the event with a presentation on the future of retirement. She informed us that when individuals are in their 50s, specifically age 53, it is the prime time to understand your financial plan for the remainder of your life. However, in a study that Young found, only half of working Americans will be ready for retirement and be able to retain their standard of living. In order to better prepare for the future, Young stressed that “we need more savings, we need to work longer,” and we need to figure out ways to “improve our decision-making skills.” A major theme of the future is to reframe our outcomes; instead of focusing on your retirement balance, focus instead on “adequacy and income.” In other words, your current 401K balance is only “a partial picture” of your future.
Each presentation provided detailed insight on a variety of topics surrounding employee benefit plans. To view a recording of the seminar, or for questions about your plan, contact us here at no charge.