PLANADVISER - July/August 2022 - 25

Further potential design changes
include
allowing
partial withdrawals and installment withdrawals, particularly
as retirees evaluate the potential benefits of leaving
their funds in the employer's plan, Maloney says. " Other
plan design topics we've considered, as well, include looking
at the match, stretching the match and profit-sharing, " she
says. " Those are things we're always talking about. "
The Need for Modeling
Adding plan features is like adding options to a new car: They
can improve the ownership experience, but they usually
increase the cost. Matt Compton, managing director, retirement
solutions with Brio Benefits Consulting Inc. in New
York City, says his firm is a " huge advocate " of most automated
features, which, he says, have had the most positive
impact on plan participants and participation rates. But he
stresses that sponsors need to understand the auto-features'
possible financial impact. " If the company is offering a
match, it needs to be very much aware of how adding automatic
enrollment may affect its financial commitment to
the plan, moving forward, " he says.
That is where modeling comes in, Compton says. He
explains that Brio Benefits tries to ensure it gives employers
the maximum out-of-pocket expense they could expect " if
we get the plan firing on all cylinders. "
" Take a plan that has a 60% or 70% participation rate,
and we successfully add automatic enrollment, " he says.
" Now, all of a sudden, we drive participation up to 95% or
98% over the first few months after making those types of
changes. That's going to have a significant financial impact
on the employer. We need to make sure it's aware of what
that will look like. "
Stamper also emphasizes the need for careful pre-change
cost analysis. It is easy to get excited about implementing
changes, he says, but the potential costs cannot be overlooked.
" The finance side of the company may come back
and say, 'Wait a minute, let's think about this, because implementing
these automatic programs may cost significant
matching dollars,' " Stamper says. " So that's the other side of
it. Yes, we all want the plans to be more successful and for
more people to participate. But communicating the potential
corresponding costs to the company is critical as well. "
Seeking a Safe Harbor
To model changes in very small plans is relatively simple
because of the low participant count, but forecasting revisions
in larger plans is potentially daunting. Maloney cites
the example of a new client that started working with her
firm last fall. When the sponsor signed on with SRP, the
plan provided a 50% match up to 6% of compensation, but
the company's highly compensated employees all were
getting refunds of excess contributions, which was a source
of discontent with that group. In addition, employee turnover
was high for the first few years after hiring but then
dropped off considerably.
After examining the plan, SRP asked why the company
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PLANADVISER - July/August 2022

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