Starting a 401(k) or qualified plan for participants might just be the easy part. Measuring the health of the plan and ensuring participants are adequately using it, can take more time and effort.
With that difficulty in mind, HR, payroll and benefits administrator ADP recently launched a new tool that is meant to aid sponsors in the measurement and effectiveness of their plans – The Plan Health Review Tool. Chris Augelli, vice-President of Marketing and Business Development with ADP Retirement Services, says often plan sponsors often have data about their participants but don’t know where to start in terms of measurement.
One starting point is asking the right questions, Augelli suggests. Among them:
“What actions will this data lead me to, what is this data telling me that I should be doing to improve the health of my plan and ultimately the retirement readiness of my employees?”
Data by itself, notes Augelli, is never the whole story. It can tell you where you need to go and what to do but without proper translation it is not very useful.
Among its features, ADP’s Plan Health Review provides sponsors an overlying score on top of the data. Four elements are analyzed and scored for sponsors: participation, deferrals, investment utilization and loans/withdrawals.
These four scoring elements are then rolled up into three possible outcomes. Either significant improvement is needed, satisfactory progress is being made or the plan is in good health. “As plan sponsors review the health of their plan on an ongoing basis they can simply benchmark their top line score to see how they are progressing before they dive down into the details,” Augelli adds.
The analysis of the data does not end there, however. Rather than just being sent a report by ADP, either a dedicated client service manager or one of a team of 30 regionally located retirement consultants will work directly with the sponsor to help educate them and their participants on areas the report has shown are deficient. “We look to have an ADP employee walk them through this and the point out the specific areas of where we can help them engage their employees to improve these results.”
Although plan sponsors, by their nature, are already fiduciaries and have certain responsibilities, Augelli says the information being presented to sponsors in these reports is meant as educational guidance and not advice.
Moving forward, ADP will this summer roll out a tool for participants and give them the same access to big data to help them better understand their personal situations. The “personal gap analysis” tool will be online and allow participants to log on with certain information already populated and give them an approximation of retirement savings at the point of retirement.
Joel Kranc is Director of Kranc Communications, focusing on business communications, content delivery and marketing strategies. He has written and worked in the retirement and institutional investment space for 17 years covering North American markets, large institutional pensions and the adviser community. firstname.lastname@example.org.
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