On the most basic level, a retirement outsourcer must be able to answer the employee need for retirement education and investment information with tools and approaches that are consistent and simple, and that provide action-oriented messaging across the spectrum of employee communications. For example, strong resources and innovative tools for employee self-service and decision making -- including integrated programs delivered in print, online, and on-site -- can help employers mount educational campaigns.
These campaigns may be reinforced on a daily basis, with regular suggestions for everything from smart saving to setting retirement goals and measuring personal progress.
Whether for defined contribution (DC) or defined benefir (DB) plans, or both, what's required is an integrated retirement outsourcing platform that functions seamlessly with an employer's existing HR communication and retirement strategy.
An integrated retirement outsourcing platform consists of the following four key elements:
Plan Management: An outsourcer should be able to deliver total retirement-plan management efficiently, minimizing transition costs and disruptions of service, so that the ramp-up to the outsourced solution doesn't result in participant confusion or operational distraction.
And, it should have the ability to manage the plan (or plans) on a comprehensive basis without leaving loose-end elements or overlooked details to the employer. Some specific questions to ask are: Does the outsourcing partner coordinate all the services it provides through a dedicated relationship-management team? Does it offer products and services that are customized to meet the employer's or participants' needs?
And, does it provide similar services for companies of comparable size? To help protect the employer, the plan management should include expertise and capability in the complex areas of plan governance and fiduciary review.
Asset Management: The outsourcer must offer true open architecture and complete fee transparency in its asset management offering. You should find out whether the outsourcer offers investment solutions that provide appropriate options for employees and seek to reduce fiduciary exposure for the company.
On the DC side, this could include offerings of "ready-mixed" funds that can address participant needs for convenience in selecting a portfolio, as well as "mix-your-own" lineups for participants who want more control in designing portfolios. It could also include such offerings as "lifecycle funds," which vary their risk profiles to match participants' stages of life.
And on the DB side -- even if a firm's DB plan is frozen or closed -- the outsourcer must be up to date on the latest pension products, such as liability-driven investment offerings, which match pension assets to the long-term funding liabilities of the plan by using fixed-income approaches that range from 15 to 40 years. Such strategies can make a crucial difference for organizations.
Administration: Questions you should ask here include: Is there a comprehensive record-keeping and technology platform for DB and DC plan administration? Is it flexible enough to support legislative and regulatory updates, as well as plan-design changes?
Can it be easily configured to meet a company's specific needs, including daily account and plan reconciliation and third-party data interfaces for DC plans, as well as pension calculations and integration of actuarial and administration data for DB plans? These are critical components in making any retirement solution work effectively.
Participant Experience : Questions to ask here include: Are there integrated employee communication and educational services, including optional investment guidance and advice, delivered across all channels -- in print, online, by phone and in person? Is there real-time access to benefit-modeling tools, so employees can make informed decisions regarding their comprehensive retirement choices and accounts?
These tools should provide employees with the capability to measure progress toward retirement goals. In addition, the availability of face-to-face retirement counseling for participants becomes an important adjunct to automated decision support.
Source(s): Mercer, LRP Publications