One could argue that virtually everything one does, and does not do, influences thinking and decisions, so where are the boundaries?
By Cyril Tuohy
Fidelity Investments has announced the first phase of a rollout of new software tools to help employers measure the effectiveness of workplace savings plans and employees to track their retirement goals.
The improvements will allow employers to gain insights on employee behavior within workplace savings plans by providing benchmark and investing behavior patterns. Fidelity said the data will help employers measure plans’ effectiveness.
James MacDonald, president of Workplace Investing at Fidelity, said it is not enough to simply provide average account balances and fund performance basics. Employers, he said, “want meaningful, detailed data that can help them analyze the performance of their savings plan and ensure their workforce is making the right decisions.”
For employers, the improvements will offer insights for executives and address three areas: What is my workplace plan designed to produce? How is it performing? What are the areas in need of attention? Fidelity said.
Employer-sponsored retirement programs offer the most effective and convenient way for employers to help employees prepare for retirement. The more power employers have to encourage employees, the more likely employees will act.
Payroll deductions, tax incentives and automatic deferral increases make the employer-sponsored model by far the most convenient way to save for the future.
A second tool will help employers determine if employees are saving enough and investing appropriately for their age, Fidelity said. The indicator will track the percentage of employees saving 10 percent or more of their salary.
Defined contribution plan balances nosedived in the wake of the 2008 financial crisis, and critics of the model blamed employers for pushing employees into defined contribution plans under the argument that “consumer-directed” retirement models were better.
Employers like defined contribution plans because they are cheaper than defined benefit plans.
For employees, the improvements will make it easier to enroll in employer-sponsored plans through a streamlined enrollment process requiring no more than two mouse clicks on a desktop, or a few taps on a smartphone or a tablet computer, Fidelity said.
Employees will also be able to view a “snapshot” of their retirement plan: how much they are saving, how the savings are invested and whether they are on track to meet their savings goals. The first two metrics have been available for years in many retirement plan tools, but the third one is a more recent addition.
The “personal progress report,” suggests steps if employees are projected to fall short of their goals, Fidelity said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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