Effective Plan Design Leads to Plan Success

Four Action Steps to Help Ensure Retirement Plan Participation and Progress

High-performing, successful retirement plans have several things in common. They generally have high participation and contribution rates as well as a high percentage of participants who are on the path to a financially secure retirement. But how did these employers (plan sponsors) reach these goals?

Before you can measure your plan success, you must have written, attainable objectives and goals.

1. Identify plan goals and objectives.

The first step in achieving your goals is deciding what they should be. Employers who offer successful retirement plans typically focus on helping their staff save well so they can retire at an appropriate age and maintain their same standard of living.

An example of a good, measurable target goal would be the 90/15/90 rule:

• Aim for 90% employee participation.
  Divide the number of actively contributing employees by the total number of eligible staff members to find out your current participation percentage.
• Work toward a 15% contribution between the employer and the employee.
  Create an employer matching scenario that encourages your staff to contribute more toward this goal.
• Strive for 90% of employees to invest in an appropriate asset mix.
  Run reports with your retirement plan provider to see if your staff is investing prudently.

To provide a seamless experience as well as valuable, in-depth reporting on these three measures, consider integrating your payroll with your retirement plan. Learn more how electronic data transfer (EDT) can specifically help your plan by asking your relationship manager.

2. Engage staff members through matching and automatic features.

Once you’ve identified your goals for the retirement plan, consider implementing these best practices to increase staff engagement and participation:

• Automatic enrollment is a plan feature that can be implemented across your organization. You have the autonomy and flexibility to enroll only new staff members or all staff members at once in the retirement plan with a predetermined employee deferral — usually around 5%–6% of the staff member’s salary. Once employees are automatically enrolled in a retirement savings plan, very few decide to opt out.
• Employer contributions are another common incentive that offer a built-in motivation to keep your staff on track to a timely retirement. For example, the employer provides a basic 5% non-matching contribution for all staff and 5% matching contribution for any staff member who contributes his or her own salary deferral. If a staff member takes full advantage of the retirement plan by contributing at least 5%, the employee would reach an optimal savings target of 15%.

Learn more about employer matching contributions

GuideStone^® would encourage both types of contributions but especially employer matching contributions so employees have skin in the game with vested interest and ownership.

Read More

3. Focus on driving employee participation.

Regularly promoting retirement awareness and providing educational materials to ministry employees is key to enhancing their use of the plan and allowing them to develop a savings strategy of their own.

Some examples of implementing employee education include:

• Holding periodic meetings to review employee benefits
• Sending emails highlighting the available matching contribution, saving strategies and diverse investment lineup
• Providing direct links to online educational resources from GuideStone

4. Track progress and success.

In order to see plan development and growth, it is important to track your progress annually to ensure the optimal health of your retirement plan. You can do this by:

• Conducting annual retirement plan reviews to evaluate progress and direct educational focus for the new year.
• Measuring plan participation rates and contribution trends annually to monitor staff engagement.
• Evaluating retirement readiness by reviewing average account balances and trajectories of participants with the goal of replacing a specified percentage (e.g., 75% or 85%) of their projected preretirement income at retirement. The greater the number, the more successful your plan.

Your ministry is dynamic and may experience different seasons of change. On that same note, your retirement plan has also been designed to be dynamic and offers the flexibility to quickly adapt to changes within your organization.

These four action steps can help you and your staff members reap the full benefits of your retirement plan. Plus, the GuideStone Employer Access^® Program (EAP) allows administrators to generate numerous reports and gather the information you need to help determine some of these metrics.

Contact your relationship manager or a GuideStone representative to help you learn more about how EAP can help you evaluate your plan’s effectiveness.

To keep effective plan design and success top of mind, download Designing a Strong Retirement Plan.