Revisiting Retirement Planning for Healthcare Organizations

0
(Photo: Lordn/Shutterstock)

The healthcare profession has just gone through and is still grappling with the worst pandemic in a century. Along with the obvious consequences healthcare workers have suffered, their employers are now dealing with the repercussions and wondering how best to recruit and/or retain employees. According to a new study from TIAA, The Current State of Retirement Plans for Healthcare Organizations, the expected turnover for nurses is 23% and 44% over the next five years. Twenty-eight percent of physicians are expected to experience turnover within the next two years.

Pensions and retirement planning are an area that employees in the health care sector are turning to. Certain themes are emerging for healthcare workers looking to their retirement plans. For example, employers hire a multidimensional workforce that is diverse, represents different socio-economic groups, generations, roles and races.

Similarly, strengthening diversity, equity and inclusion (DE&I) is another new priority for healthcare professionals. The report says DE&I’s inclusion in retirement plan design can include investment menus and employee engagement programs. For example, adoption of automatic services is growing, with 71% of organizations using automatic enrollment and more than half automatically re-enrolling those who unsubscribe each year.

Plan sponsors also assess how well their plan’s investment options align with DE&I values. In fact, the report says, 86% of them say it’s important to have responsible investing on the menu. At the same time, plan sponsors hope to boost employee engagement with programs that provide advice for everyone, budgeting and debt management, and more.

Ninety-five percent of employees say it would be very or somewhat beneficial for their employer to provide them with stable and guaranteed retirement income throughout their lives. With that, the report shows that 61% of employers say their primary goal is to provide plan members with a way to save for lifetime income in retirement.

Another 26% of employers want to help plan members build wealth and 13% say lifetime income and wealth accumulation are equally important. So what can plan sponsors do?

The report notes that plan sponsors need to see the big picture of their plan strategy from the investment menu to plan metrics for success. Among organizations that currently offer a guaranteed lifetime income option in the plan, 85% say it is extremely or very helpful. Of those who don’t offer this type of investment option, 43% are very interested in doing so now, up from 35% in 2020.

Another option is to provide target date funds or TDFs to participants. Seventy-seven percent of plan sponsors would be very interested in a target date solution that allocates a portion of assets to lifetime income.

Auto-enrollment also supports not only an organization’s inclusion goals, but also the ease with which employees can invest and grow their retirement wealth. For instance,

  • 71% of organizations use automatic registration. Of those that don’t, 42% plan to implement this provision within the next 12 to 18 months.
  • Organizations that offer automatic registration experience an average participation rate of 70% compared to 43% for those that do not.
  • Some organizations are successful in automatically re-enrolling participants who withdraw each year. That’s why 66% of them, compared to 58% in 2020, have extended it to current employees through an annual re-enrollment option.
  • At 67%, 403(b) plan sponsors are more likely than 401(k) sponsors (36%) to offer an automatic increase in employee contributions.

The report concludes by emphasizing that focusing on the workforce is paramount and that an effective retirement plan is one of the best ways to reflect this. The most attractive retirement plans are those that provide employees with sufficient retirement income, with plan investment options that provide guaranteed income for life.


Source link

Share.

Comments are closed.