Over the last decade, the retirement industry has witnessed the significant impact of strategic plan design on participant outcomes. A growing body of research shows the benefits of features like auto-escalation, auto-enrollment and more, but how do plan sponsors decide which levers to pull and how hard to pull them? To answer that question, BlackRock built Future in Focus, a tool that quantifies the trade-offs between different plan design variables and can help you deliver optimal results for participants.
Below are three of the most common ways your peers have been using Future in Focus to support plan design decisions. Try these for yourself—or use the recently enhanced tool to explore the impact of other potential changes.
1. Stretching the Match
The employer match is one of a plan sponsor’s most powerful resources to encourage positive savings behaviors. But how do you best use it to reward saving while also managing cost? Stretching the match is one answer. Say you’re currently matching 100% of contributions up to a rate of 3%. Shifting to a 50% match up to a rate of 6% is likely to boost your employees’ savings rates at no additional employer cost. Future in Focus can help you take a closer look at how stretching the match can improve participant outcomes.
2. Expanding the Autos
Sometimes the biggest hurdle to helping employees save is getting them to sign up for the plan in the first place—or, once they’re signed up, encouraging them to increase their contributions. That’s where automatic features come in. Auto-enrollment gets employees saving from the moment they become eligible for a plan, putting their money to work right away without requiring them to jump through any hoops. Auto-escalation further nudges participants, helping them go from saving to saving enough.
The benefits of autos can be remarkable—and they can be quantified. Future in Focus can help calculate the long-term effect of starting contributions earlier and automatically increasing participant’s contributions over time.
3. Evaluating the Impact of Fees
It seems obvious to say that, all else being equal, lower fees are better than higher fees. But how would a change from, say, a 0.60% fee to a 0.40% fee affect participants’ outcomes? It turns out that reducing fees by 20 basis points could translate into tens of thousands of dollars over the decades—money that could make the difference between retirement-ready and retirement not-quite-ready. Future in Focus helps illustrate the impact of reducing fees and provides real-life insights that could add clarity during an investment review.
Building your Scenario
With just a few straightforward inputs, you can understand how a plan’s specific default savings and investment features currently prepare participants for retirement. You can also explore custom “what if” scenarios to identify changes that could have the biggest influence on participant outcomes—giving you valuable perspective for plan design conversations. Please reach out to your BlackRock representative to learn more about how Future in Focus can support upcoming plan design conversations.
IMPORTANT: The projections or other information generated by the Future in Focus App (“App”) regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Actual participant outcomes may vary with each use and over time.
Investing involves risk, including possible loss of principal.
All App analysis and output are for informational purposes only and should not be construed as a recommendation or investment advice. The App should be used as part of a comprehensive due diligence process, should not be relied upon exclusively when evaluating a plan and is not meant to replace a plan sponsor’s fiduciary responsibilities.
Prepared by BlackRock Investments, LLC, member FINRA.
® 2020 BlackRock, Inc. All rights reserved. BLACKROCK and FUTURE IN FOCUS are trademarks of BlackRock, Inc. or its subsidiaries. All other marks are the property of their respective owners.
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