retirement savings crisis: what employers can do

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THE RETIREMENT SAVINGS CRISIS: WHAT EMPLOYERS CAN

DO

2016

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America’s Retirement Savings CrisisWhat Employers Can Do

EANJ’s Role

Education/AwarenessFinding Solutions

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In 2012, 8 state-wide meetings (217 employers) expressed top concerns:

1. Increased healthcare costs (78%)2. Productivity of workforce (62%)3. Mismatch of skills of current and future

workforce (39%)4. Finding money for capital investments (32%)

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The healthcare cost problem was being “solved” by cutting benefits and shifting costs to workers

Also, a move to high deductible plans that worked for some employees but no others

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725 EANJ members (50% of membership)Total 23,000 covered lives

Helping to Solve the Healthcare Crisis

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1. Increased healthcare costs (78%)2. Productivity of workforce (62%)3. Mismatch of skills of current and future

workforce (39%)4. Finding money for capital investments (32%)

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ProductivitySkills Wages

Strategic HR

Hiring Retirement

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Hiring, Prediction and Replacement

At the point of hiring, productivity is not known, it is only predicted

Productivity may peak without investment in new equipment, technologies and training

At some point the employer may replace and start over

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“Solving” the Problem Full-time opening remains vacant Older worker works part-time (no

healthcare benefits) Full-time hiring is delayed Delayed investment in productivity

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A diminishing return

When workers cannot be replaced: o Employers are less likely to invest in

new equipment to increase productivity >>>

o Pay raises, if any, are not based on productivity >>>

o Employers are less likely to invest in new equipment to increase productivity.

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STRESS AND MORALE

“More with less” has become a permanent feature for many firms

Half of all companies surveyed say that employee morale is low

Source: Braun Research, Princeton, NJ (2012)

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38 million working-age households (45%) have no private retirement account

Medium retirement account balance is $3,000 for all working households

$14,500 for near retirement households

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What Employers Can Do?

Fewer Employers Sponsor 401K

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Reasons that small employers do not sponsor 401K

Administrative burdens Fiduciary and legal issues Absence of in-house expertise Costs and fees Employee turnover Employees don’t care about retirement

savings

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After wages, employees report healthcare and retirement savings as “very important”

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Most Americans Say They Will Rely on 401K for Retirement

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The EANJ Initiative:

Help NJ employers solve their retirement plan challenge

- Superior quality- Greater value than employers can find on their own- Customize to meet individual employer needs - Fiduciary solutions designed to protect employers- Experienced experts to maximize benefits

EANJ Sponsors a Multiple Employer Plan (MEP):• Allows multiple employers to adopt a single retirement plan • Delegates many of the fiduciary liabilities inherent in qualified retirement plans • Eliminates employer involvement in annual plan audits • Eliminates employer tax (Form 5500) filings • Provides economy of scale in pricing and best practices

• Custom Plan Design• Robust Recordkeeping and Administrative Services• Disciplined Investment Selection and Monitoring• Effective and Engaging Participant Communication

EANJ Cornerstones of Success

• Objective based plan designs • Custom plan designs to maximize the benefit for adopting employers • Administrative best practices & standards to ensure administrative

efficiency

EANJ Solution Includes: Custom Plan Design

EANJ Solution Includes: Plan Recordkeeping, Administration & Compliance

• Turn-key recordkeeping and administrative solution• Plan Documentation• Daily valuation of participant accounts• Enrollment, distribution and loan processing• Year-end compliance testing• Tax withholding and reporting

EANJ Retirement Savings Advantage Team Sponsor, Fiduciary Trustees, Investment Advisor, Administrator, legal Counsel