Plan members reassess their retirement savings and preparation for the New Year


This month, as calls from pension plan members and website visits have increased, archivists are noting changes, some of which relate to job losses, employment trends and economic disruption resulting from the ongoing COVID-19 pandemic.

Consistent with previous years, in January pension plan participants re-evaluate their finances by looking at the whole retirement readiness picture, says Rachel Wekker, senior director of retirement at T. Rowe Price.

“We definitely see this pattern of behavior year after year,” she says. “Early in the year, as people reassess their financial situation, you see volumes increase the next day. [the] Martin Luther King jr. [holiday]. Historically, there’s a bigger jump than what you typically see after the weekend.

T. Rowe Price’s numbers for call volume increases show that calls this year increased again in January and were consistent with previous years, Wekker adds.

“When we compare volumes from ’22 to ’21 and ’20, we don’t see any difference in volume this year compared to others,” she says. “Volumes are constant, but we are seeing this increase.”

The archivist states that “it is usual to see increased activity on Tuesdays after MLK weekend (up 60% from a 20% increase after a typical weekend).”

The main concerns of many participants continued in 2022 compared to previous years. For example, interest in locating tax forms and information, consuming content about investing, and using T. Rowe Price’s Paycheck Impact Calculator continued.

The company’s January figures show its Salary Impact Calculator accounted for 50% of all tools usage in January to date, compared to a typical usage of 30%. In addition, the overall use of tools and calculators is up from last January.

Voya also saw a spike in attendee calls and website activity this month, said Amy Vaillancourt, senior vice president of workplace solutions and experience at Voya.

“Historically, January is a time of very high engagement,” says Vaillancourt. “We’ve already seen a very high level of engagement from our customers this week, and we attribute that to things like checking their statements, getting ready to plan for taxes and questions about savings and welfare. be financial.”

Voya did not provide numbers for call center volumes or website visits in January.

Change in contribution rates

T. Rowe Price saw an increase in participants changing contribution rates and a slight increase in retirement savings withdrawals.

For example, there was a 1 percentage point increase this year for making changes to contribution rates from 2021 – from 3% to 4% of visits taking this action – among plan sponsor participants T. Rower Price. The increase in the volume of withdrawals compared to last year was 0.7% in 2022 compared to 5% last year.

Wekker says further analysis is needed to determine whether, overall, participants increased or decreased the amount of contributions.

The increase in activity could be a protracted economic shock and hangover from the COVID-19 dislocation, including job loss, but the data would need to be studied further to draw connections, Wekker says.

The CARES (Coronavirus Aid, Relief, and Economic Security) Act of 2020 and Economic Stimulus Bill – in response to the economic fallout from the COVID-19 pandemic – included provisions for expanded distribution options and tax treatment favorable up to $100,000 of coronavirus-related (CRD) eligible pension plans. The bill also increased the limit on the amount a plan member can borrow from a qualifying pension plan.

“I don’t have any data to back that up, but we do know that some people have taken money out of their plan with a [CRD], and we know people don’t pay them back,” Wekker says. “But are people compensating for this leakage by increasing their dues more than they would have done in the past? This is something we need to do more analysis on, but I would be interested to better understand how this relates to the last two years.

Change focus

Attendees are consuming different content than they were at the start of the pandemic, Wekker says.

“Earlier in the pandemic, there was a pretty dramatic shift towards content related to more financial wellness topics and a shorter-term focus like debt management or budgeting,” he explains. -she. “What we’re seeing right now is a return to more retirement planning, retirement savings content, more of a long-term focus and that might reflect where people are at throughout the journey as we go through the COVID crisis and people are able to start looking more into the future at this point.

Personalized education to address a participant’s specific challenges, and follow-up behavioral nudges with resources and education are essential for T. Rowe Price to further support its plan sponsors, Wekker adds. For example, a participant whose retirement savings amount is less than the optimal amount for their age and income will receive personalized follow-up messages.

“We continued to build our personalized capabilities to build on behaviors they might have had in the past regarding the data we know about them: their savings rate, their plan, their design, what might be their matching formula, and we’re able to use that information to identify the best next steps,” she says.

Plan participants also receive behavioral prompts to take action.

“Can you encourage them to increase their contribution rate, reconsider their asset allocation, maybe update their beneficiary information? It’s the main way registrars can work with plan sponsors and advisors because we get the big picture of an individual’s financial situation so we can provide really compelling information for help them appreciate the long-term benefits of these behavioral changes. today,” says Wekker.

She adds: “Participants might receive a message saying: . [deferring] a little less than [what is recommended].’ And we provide a link to this calculator so participants can understand if they can afford to raise 1% or 2%? »

Voya is also taking advantage of this period of strong member engagement to dedicate resources to personalized communications aimed at helping plan sponsors address member concerns and prepare for retirement.

“We monitor topics that people are interested in and adapt them to the time of year,” says Vaillancourt. “Things like budgeting and debt management are examples of what we would be addressing in January.”


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