How Plan Sponsors Can Help Employees Retire on Time: Turning Plan Design into Positive Outcomes

As a corporate plan sponsor, your role in your employees’ retirement journey is more significant than you might think. Yes, you’re responsible for managing the mechanics of the plan and meeting fiduciary obligations. But beyond that, you have the opportunity to shape outcomes that deeply affect your employees’ futures. One of the most valuable gifts you can offer is the ability for participants to retire on time, with financial security and dignity.

Yet far too many American workers aren’t on track. According to a recent survey by the Employee Benefit Research Institute (EBRI), only 1 in 5 workers feel “very confident” they will have enough money to live comfortably throughout retirement. The causes are complex—low savings rates, competing financial priorities, and a lack of clear guidance—but the good news is, thoughtful plan design can make a meaningful difference.

In this post, we’ll explore how corporate plan sponsors can use three key strategies to help improve participant outcomes:

• Automatic features (auto-enrollment and auto-escalation)

• Financial wellness programs

• Target date fund alignment

Let’s take a closer look at each—and see how they can move the needle toward better retirement readiness.

1. Auto Features: Participation and Savings on Autopilot

One of the most common roadblocks to retirement saving is inertia. People know they should save, but life gets in the way. Bills are due, kids need clothes, and the retirement plan enrollment form gets pushed to the bottom of the pile.

That’s why auto-enrollment and auto-escalation are such powerful tools. By flipping the default from “opt-in” to “opt-out,” you nudge employees to start saving without relying on them to take the first step.

Real-World Example: Boosting Participation Through Auto-Enrollment

Consider the example of a mid-sized manufacturing firm with 200 employees. Prior to implementing auto-enrollment, only about 58% of eligible employees were participating in the company’s 401(k) plan. Despite regular educational sessions and email campaigns, participation plateaued.

After consulting with their retirement plan advisor, the company introduced auto-enrollment at 3% of pay for all new hires and added auto-escalation of 1% per year, capping at 10%.

The result? Within 12 months, plan participation rose to 91%, with average deferral rates increasing from 4.2% to 6.7%. Not only were more employees saving, but they were saving more.

That’s the power of default settings. They meet employees where they are and guide them toward better decisions without requiring perfect financial discipline.

Best Practices for Auto Features

• Start with at least 6% as the default contribution rate to promote meaningful savings.

• Pair auto-enrollment with auto-escalation to grow savings over time.

• Re-enroll existing employees annually or during life events to boost ongoing participation.

2. Financial Wellness: Helping Employees Solve the Right Problems

Let’s face it, retirement isn’t the only financial concern on your employees’ minds. Many are juggling credit card debt, student loans, rising childcare costs, or simply trying to build an emergency fund.

Financial stress is one of the biggest barriers to retirement saving.

That’s where financial wellness programs come in. These programs provide holistic education and resources to help employees address their broader financial lives from budgeting and debt management to saving for retirement and understanding insurance.

When employees feel more in control of their finances, they’re more likely to participate in retirement plans and contribute consistently.

Ideas for Enhancing Financial Wellness

• Offer financial coaching (virtual or in-person) as part of your benefits package.

• Provide interactive tools and calculators within the retirement platform.

• Partner with your recordkeeper to host on-demand webinars or in-person workshops.

• Measure engagement with these resources and adjust based on feedback.

Tip: If your retirement plan provider offers a financial wellness hub, promote it through onboarding, annual enrollment, and internal communications. Awareness is half the battle.

3. Target Date Funds: One Fund, Many Benefits

Most participants aren’t investment experts and they shouldn’t have to be. That’s why target date funds (TDFs) are the default investment of choice in most corporate retirement plans.

TDFs automatically adjust the mix of stocks and bonds based on the participant’s retirement date. They’re easy to understand, low maintenance, and well-diversified.

But as a plan sponsor, your job isn’t just to offer TDFs. It’s to make sure the ones you offer are aligned with your workforce’s needs.

What to Watch For in TDF Design

• Glidepath philosophy: Is it “to” retirement (becomes conservative at retirement) or “through” retirement (remains growth-oriented after retirement)?

• Workforce demographics: Younger, lower-income employees may need a more growth-oriented TDF to build assets.

• Cost and transparency: Ensure the funds are reasonably priced and clearly disclose fees. .

Regularly review your TDF lineup with your advisor or investment committee. If your population is diverse, you may even consider offering multiple TDF suites or personalized managed accounts.

Putting it All Together: A Culture of Retirement Readiness

Improving participant outcomes doesn't happen by accident, it happens by design.

Here's how you can start moving the dial:

Action	Why It Matters
Implement or raise auto-enrollment	Captures more participants early and eliminates inertia
Add auto-escalation	Encourages long-term savings growth
Introduce financial wellness resources	Helps employees balance competing financial needs
Review and align your TDF lineup	Ensures investment options match participant profiles
Communicate consistently	Reinforces engagement and boosts trust in the plan

Even modest changes, like increasing the default contribution rate or adding a budgeting tool can produce significant long-term benefits for your employees.

And when your people are financially prepared to retire, everyone wins. Employees transition with confidence. Turnover can become more predictable. And your organization earns a reputation as a workplace that truly cares about long-term financial health.

Final Thoughts

As a corporate plan sponsor, you hold the keys to helping your employees retire on time. That’s not just a fiduciary role, it’s a leadership opportunity. By making smart design decisions today, you can unlock better futures for tomorrow.

If you’re ready to assess your plan’s impact on retirement readiness or explore how to implement these strategies, connect with your advisor or provider for a plan review. The right steps now can lead to measurable results and lasting financial clarity for your employees.

Scott Higgins | AIF ®, CFP®, CPFA®, NSSA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm’s individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!

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Top 5 Administrative Failures in Employer-Sponsored Retirement Plans and How to Prevent Them

Managing an employer-sponsored retirement plan can be complex, and even well-intentioned plan sponsors can encounter administrative failures. Here are the top five common failures and practical suggestions to prevent them:

1. Failure to Follow Plan Terms

Failure: Not adhering to the specific terms outlined in the plan document, such as compensation definitions or eligibility criteria. Prevention: Regularly review and understand the plan document. Ensure clear communication between HR, payroll, and plan administrators.

2. Missed Enrollment of Eligible Employees

Failure: Failing to enroll eligible employees in the plan, leading to missed contributions and potential compliance issues. Prevention: Implement automated enrollment processes and conduct periodic audits to ensure all eligible employees are enrolled.

3. Incorrect Loan Repayments

Failure: Not properly withholding or collecting loan repayments, resulting in defaulted loans and potential tax penalties. Prevention: Establish robust loan administration procedures and regularly monitor loan repayments to ensure compliance.

4. Late RMDs (Required Minimum Distributions)

Failure: Failing to distribute the required minimum amounts to participants who have reached the age for RMDs, leading to penalties. Prevention: Set up automated reminders and tracking systems to ensure timely distributions.

5. Inconsistent Record-Keeping

Failure: Inaccurate or incomplete record-keeping, which can lead to errors in contributions, distributions, and compliance testing. Prevention: Maintain meticulous records and conduct regular audits to ensure accuracy and completeness.

By addressing these common administrative failures, plan sponsors can enhance the efficiency and compliance of their retirement plans, ultimately benefiting both the employer and the employees.

Scott Higgins | AIF ®, CFP®,CPFA®, NSSA®

Financial Advisor

Since 2012 at Rose Street, Scott has been responsible for helping the firm's individual wealth management clients with income strategies for retirement and consulting with employers with their employee retirement plans. In free time, he enjoys golf, biking, skiing, cooking, and traveling. Fun Fact, Scott has a hobby of filling growlers with coins!