How should sponsors manage the increased cost for retirement plans?
Tozzi: In addition to updating budgets, it’s important to remember the long-term objectives for offering retirement programs to employees and balance that with the short-term impacts. As long as the retirement program is aligned with the company’s objectives, it is best to be patient. A Watson Wyatt survey shows that very few employers have plans to actually freeze benefits. Ford: Plan sponsors can also consider and outline alternative asset allocation strategies, which may reduce volatility and the need for cash infusions down the road. What should plan sponsors communicate to participants? Tozzi: If the company offers a pension plan, sponsors should reinforce that prior benefits that have been accrued are protected. Update participants about the plan’s funded status and tell them that the company intends to make its scheduled minimum contribution. Plan sponsors want to communicate the truth, but also allay the fears of participants as much as possible. Ford: Sponsors of defined contr
