BEST PRACTICES: Educating Employees about the Adequacy of Retirement Benefits Flashcards
Government employers and plan administrators should educate employees about retirement income and include the following considerations when preparing the education program.
What is retirement benefit adequacy?
The extent to which retirement income is sufficient to replace pre-retirement income over the lifetime of retirees and their dependents.
Which factors greatly impact retirement benefit adequacy?
Volatility in financial markets and plan design.
What does GFOA recommend regarding employee education on retirement income?
Government employers and plan administrators should educate employees about retirement income, including variability of income and strategies for ensuring benefit adequacy.
What should be considered when preparing the education program on retirement income?
Specific plan provisions, information on Social Security benefits, potential inadequacy of combined income sources, and strategies for asset accumulation.
What are important elements to include in financial and retirement planning education?
Importance of early savings, continuous financial education, access to unbiased educational programs, and information on retiree medical benefits and associated costs.
What role do external providers play in educating employees about retirement benefits?
They provide financial education and advice, cover all retirement assets, offer tools for estimating retirement security, and ensure informed investment decisions without transferring fiduciary responsibility to the employer.
What should a contract with an investment advice provider stipulate to protect the employer and retirement system?
That the vendor bears the risk of fiduciary liability for recommendations and does not sell or derive income from the sale of investment products to participants.
Why might new employees need to work longer and save more than existing employees?
Due to fluctuations in financial markets and changes in defined benefit pension plan provisions that may result in lower benefits.
How can employees be educated about the importance of saving for retirement?
Through onsite enrollment meetings, employee orientation programs, online financial planning, and other strategies.
What should be included in unbiased educational programs and planning services?
The entire benefits package, potential financial and legal issues during retirement, and options for additional savings such as IRAs.
