Plan sponsors had their hands full last year. Consolidation and cybersecurity among plan service providers; financial wellness programs; retirement income; and regulation—particularly the SECURE (Setting Every Community Up for Retirement Enhancement) 2.0 Act—all received extensive news coverage and discussion.
This article was originally featured as the cover story of the PLANSPONSOR January - February 2024 edition.
Plan investments contended with rising rates and an uncertain economic outlook. The continued adoption of collective investment trusts vs. mutual funds changed the composition of many plan's lineups. The convergence of wealth management and retirement plan services continued.
As to SECURE 2.0, the outlook for some of its optional provisions remained uncertain; sponsors' interest in financial wellness programs and retirement income options continued to grow. The impact of IBM's decision in November to shift to a cash balance plan remains unclear.
Cybersecurity risks made headlines as a cyberattack on retirement and insurance platform provider Infosys McCamish Systems LLC affected systems at Ascensus, Principal Financial Group, T. Rowe Price, and The Vanguard Group. Plan litigation continued to move downstream to smaller plans.
PLANSPONSOR asked industry experts what they saw as the key events and trends of 2023 and to predict, informally, which ones are likely to continue, and what new ones are likely to emerge, in 2024.
Financial Wellness: 2023 Recap
Rebecca Liebman, CEO and co-founder at LearnLux in Boston says turbulence defined the financial landscape last year.
"2023 highlighted the interconnectivity between individual financial decisions and economic factors," Liebman says. "Many plan sponsors noticed these trends and acted. In 2023, we saw a large increase in companies seeking trusted financial wellbeing benefits to support employees' financial resilience."
The Employee Benefit Research Institute's 2023 EBRI Financial Well-Being Employer Survey supports the idea that more sponsors are adopting financial wellness programs. Fifty-four percent of the employers surveyed that were interested in implementing well-being benefits currently offered a program, a result essentially unchanged from 2018 through 2022. Yet, the report noted that employers without financial wellness initiatives increasingly say they are working to implement a program instead of just being interested in providing one. The percentage doing so increased from 12% in 2018 to 29% last year. Correspondingly, the "just interested " percentage fell from 34% to 18%.
Financial Wellness: 2024 Outlook
Liebman says she thinks 2024 will be a banner year for workplace financial wellbeing.
Multiple provisions of SECURE 2.0 go into effect, presenting opportunities and challenges for employers. She says financial wellbeing programs with unbiased guidance from Certified Financial Planner™ professionals will be the gold standard.
The EBRI report concludes that financial wellbeing will continue to evolve from "a focus on retirement preparedness to a more complete picture across all aspects of an individual's finances, despite there still being a retirement preparedness bias. With the hope of reducing employees' financial stress and increasing productivity, companies are looking for better ways to evaluate the impact of their financial wellbeing programs, whether on a retention/recruitment or productivity basis."
To launch the full article, "What's Around the Corner?" from PLANSPONSOR, click here.