2024 PSCA National Conference:
Key Topics for Plan Sponsors

The economic conditions of the past two years, particularly inflation, brought a renewed focus on holistic financial wellness solutions. In a popular session on emergency savings accounts, there was a major focus on how to design and structure benefits in a way that motivates employees to take advantage of them. While most in the room were not willing to implement the in-plan solution featured in SECURE 2.0, there was much discussion around out-of-plan solutions and how to incentivize programs in such a way that employees use them for their intended purpose (i.e., emergency savings).

The keynote session with Michelle Singletary, award-winning financial advice columnist, reinforced this theme. Her focus was on what plan sponsors can do to support their employees in accessing the financial education and coaching necessary to achieve financial wellness. Increasingly, plan sponsors appear to be reacting to employees seeking financial advice from Human Resources teams, particularly in the low-to-moderate income segment.

We recommend: Plan sponsors should evaluate the financial education resources that are available through their advisor and/or recordkeeper and consider supplementing existing efforts to cover any gaps. Programs without an education strategy should consider implementing a program with a holistic focus on employee well-being. 

The conference’s two investment sessions were well attended. There was significant focus on investment menu design, which covers the decision to include, or not include, specific asset classes, and whether to offer active and/or passive exposure. Plan sponsors discussed how it is easy to fall into the cycle of reviewing investment performance and fees on a regular basis without taking the time to review the “why” of each investment. This “why” can be established as part of an investment structure assessment, which evaluates the current investment menu design.

At the PSCA Conference, we polled the room during the “advanced class” investment workshop session about their use of investment structure assessments. Roughly 30% had conducted an assessment in the last three years, and another 30% had in the last five years, with the remaining 40% having not conducted one in the past five years. Without a regular investment structure assessment, there is increased risk that “inherited decisions” from previous committee members are carried forward without the documentation as to why investment decisions were made and why those decisions are appropriate for the plan.

We recommend: Plan sponsors should conduct an investment structure assessment at least every three years and ad hoc if major workforce changes occur (e.g., major acquisition, freezing or terminating a defined benefit plan). With regular review, the investment menu design remains appropriate for the workforce and allows the committee to make changes if necessary. See the Sample Investment Structure Assessment Format in the appendix for an example format.

While most people attending the conference did not expect Congress to pass major new or updated regulations in an election year, there was still concern around adapting to existing regulation — namely, SECURE 2.0. Plan sponsors are anxious about staying on top of implementation dates for key provisions, in addition to evaluating the efficacy of optional provisions (e.g., emergency savings accounts and matching student loan payments).

From a fiduciary risk perspective, questions centered around available committee member time relative to the thoroughness that could be achieved in executing key fiduciary responsibilities. For example, did the committee have time to conduct a full-scale target date fund analysis consistent with the Department of Labor’s guidelines, or did the committee defer the process and rely on performance benchmarking? This topic may see renewed interest given the Government Accountability Office’s recent request to the Department of Labor asking it to update and renew its guidance on target date funds.

We recommend: Plan sponsors should work with their advisors to maximize time spent managing the retirement program. One best practice is implementing an annual schedule of key meeting topics and creating meeting agendas in advance. This “checklist” can help the committee efficiently execute on key fiduciary responsibilities regularly. 

The standing-room-only session on plan benchmarking overflowed into the hallway. Within the broad range of plan design decisions, three topics were most discussed:

• Eligibility: Many plan sponsors are considering the benefits of shortening eligibility requirements against the additional administrative burden it creates. While not every plan sponsor is willing to consider immediate eligibility, we do see more than a few plan sponsors aligning on shortening requirements to 90 days to coincide with a “trial period” for new hires.
• Matching Contributions: While budgets are tight and there are few plan sponsors looking to meaningfully increase matching contributions, we are seeing companies without a match, or those that only use a discretionary match at year end, working to implement a matching formula based on participants’ elective deferrals. The trend indicates companies, large and small, are acknowledging that a matching employer contribution is becoming an expected benefit.
• Plan Loans: Plan sponsors are evaluating the number of loans available in the plan and seeking to balance participants’ desire to take loans from retirement assets with the fact that frequent loan utilization can negatively impact retirement outcomes. We are seeing more plan sponsors take the step to limit plan loans to one per participant and even implement “cool down periods” where participants need to wait 30 days after loan repayment before taking a new loan.

While these were three of the most common topics of discussion at the conference related to plan design, it is worth giving an honorable mention to emergency savings accounts, matching student loan payments and evaluating shortening vesting schedules.

We recommend: The common thread, in our view, is a growing recognition that an organization’s retirement program is a key tool in recruiting, rewarding, and retaining top talent. PSCA’s annual survey is the marquee name in the defined contribution industry, offering great insight into what other plan sponsors are doing to maximize employee engagement and generate positive retirement outcomes. Reviewing the survey topics and trends that are meaningful for your participants could generate new ideas for your program.  

Overall, plan sponsors are showing their dedication to fulfilling their fiduciary duties and commitment to improving the financial wellbeing of their employees. As we move toward year end, we look forward to continuing the conversation. Please contact your IAM representative for help achieving your goals, or explore our custom investment solutions.