You might think you can ignore PEPs. And you might be in for a surprise.
Education
Astute fiduciaries understand this danger. They can proactively head off turbulence before the waters get particularly bad.
In the end, though, you must remember the PEP is brand new. Not all offerings will offer the same advantages. Some may be designed specifically to forego one advantage to emphasize another.
Only time will tell, but the smart money is that open 401k MEP/PEPs are a game-changer. Are you planning to sit on the bench or are you suiting up and getting ready to wade in?
If plan sponsors assume things can return to the pre-Covid normal, they risk exasperating existing problems. They’re there and cannot be ignored.
The biggest issue when it comes to access is cost. It’s not just the plan sponsor’s sensitivity to higher costs. It’s the service provider’s ability to keep those costs low.
This is an all too common problem,… It’s important right now for 401k plan sponsors to urge their service providers to educate employees about it.
If you are responsible for 401k participant education or in any form of employee-based financial literacy program, you may want to adopt methods used by others who teach adults.
Aside from pep talks and infusing it into their corporate culture, don’t forget that much of what is needed can be built right into the plan.
All these strategies can be employed today and have proven themselves effective. It’s unclear that disclosing projected retirement income will provide the kind of incentive that will work.
