What’s the Goal? Last I heard it was preparation for retirement via tax preferred savings … but, looking around at what is typical industry practice, perhaps I have it all wrong.
Education
This isn’t to say younger employees should be left out of this type of education altogether. They shouldn’t. It’s important the message is drip, drip, dripped from the beginning of the onboarding sequence.
Before you scorn the use of badges, remember, the company match is the ultimate badge. If you meet a minimum savings goal, the company awards you a “badge” of a matching contribution.
Learning to budget isn’t a single lesson. It’s a series of lessons that get more advanced as the student progresses.
Because things happened so fast, everyday folks could see in real time how long-term financial systems unfold. In the end, this may have been the greatest lesson of all, and it came courtesy of living in the real-world economic laboratory that was 2020.
You might think you can ignore PEPs. And you might be in for a surprise.
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.
