DEI and Your Employer-Sponsored Retirement Plan

Does your company-sponsored retirement plan align with your company’s Diversity, Equity, and Inclusion (DEI) efforts? If you haven’t considered it, it may be time.

In addition to providing financial security in retirement, participation in retirement accounts is an important channel through which families build wealth. But data from the 2019 Survey of Consumer Finances (SCF) show households with access to retirement plans can vary significantly by race and ethnicity.[i]

Without access to an employer-sponsored retirement plan, families miss out on an important income stream option for retirement. Even those with access to a retirement plan may choose not to participate. Insufficient income may be one reason an employee chooses to opt-out, but other factors, such as a lack of auto-features or limited employee education, may also be the cause.

Certain employee demographics may be at a disadvantage, which is why it’s important for employers to examine their plan data to identify where improvements can be made. To begin, gather all the information you can and break it out by employee demographics:

• Who is participating, and how did they enroll (auto-enrollment)?
• Who is not participating? Did they opt-out of auto-enrollment?
• What are the contribution levels?
• Who is taking distributions or loans, and why?

If you have an investment committee, do the members reflect your workforce? If not, consider expanding or adjusting the composition of your committee for varied thoughts and insights into plan design, features, and education.

One of the best ways to evaluate whether your plan meets the diverse needs of your employees is to ask them. Surveys and focus groups help determine what’s working and what needs improvement, and it’s also an essential step in addressing employee concerns. 

One size does not fit all when it comes to investment education for employees. It’s essential that employers provide a range of education opportunities to reach the different groups of employees – and in varying formats. A mix of brochures, videos, seminars, and articles throughout the year can help get targeted messages to the different employee populations. If you have employees that speak limited English, have your educational material translated.

When examining DEI in your retirement plan, don’t overlook the vital role of plan design. Auto-features can increase participation, encourage higher deferral rates, re-engage employees who may have opted out of the plan, and discourage employees from cashing out.

When you build a retirement plan and education strategy around the needs of your employees, you’re helping them understand why it’s essential to save and how your company is helping. The financial professionals at AssuredPartners Investment Advisors work with employers of all sizes to design a retirement plan and education strategy aimed at positively impacting all employees.