New Retirement Savings Tools A Must

Plan sponsors should educate participants more effectively or a generation of Americans will see their last years be anything but golden. That’s because the most popular savings tool, the defined contribution plan, is misunderstood by many plan participants.

The financial services industry’s efforts to emphasize more retirement has “not been a tremendous success,” said Christopher Matzke, chief sales officer for ICMA-RC, at news conference in Manhattan on Wednesday.

ICMA-RC, which has worked on public sector employment retirement programs, is recommending a set of electronic tools that can focus on the problem of underserving for retirement, according to Matzke.

“What I’m talking about is data visualization techniques so clients can see what is going on now and get instant access to their data,” he said.

Getting immediate access to data and breaking it out in various ways can identify problems before participants start getting far behind in retirement savings and show who is investing ineffectively, Matzke noted.

Matzke said these electronic tools can help plan officials find who is falling behind in funding a secure retirement. These tools can also focus on groups in which the retirement savers are saving too little or investing too conservatively, such as those in the 20- to 30-year-old category.

They can use the data “to drill down by all sorts of groups and subgroups and they can actually get to the point where they can say ‘we have three people at a certain location at a certain age who are probably invested too conservatively,’” he said.

Plan sponsors can use this information “to reach out to them and find out why this is happening.”

Matzke said the vendor can use these tools to educate and advise the best way to use defined contribution plans.

The problem with today’s plans, he added, is that plan officials could only “hope” that participants will show up at investment education meetings and learn the best way to use these plans. Now, using these tools, plan officials can be proactive.