2019 new york lunch & learn - sentinel benefits...2019 lunch & learn financial planning and...

Presented by:

Alan Pfeffer, QPA, AIF®

Lisa Jones, Esq., CPC

Best Practices, Trends & Cutting Edge in Retirement P lans

New York

Lunch & Learn 20

19

Financial planning and investment education and advice are offered through Sentinel Pension

Advisors, Inc. (SPA), an SEC registered investment advisor. Investment brokerage services offered

through Sentinel Securities, Inc. (SSI). Member FINRA & SIPC. Sentinel Benefits & Financial Group

is the brand name for the Sentinel family of companies, which includes SPA and SSI.

Best Practices For ERISA P lans Today • Prevalence of 401(k) Plans: 90%, regardless of plan size

• Prevalence of Roth: 72%!

• Prevalence of Profit Sharing Plans: about 20%

• Prevalence of Non Qualified Deferred Compensation Plans: about 7%

(much more prevalent for large companies)

• Prevalence of Defined Benefit Pension Plans: about 2%

(again the bigger the company the more prevalent)

• Safe Harbor Plans: 54% (Match of 4% or 3% Non-Elective)

• Prevalence of loans: 91%

• Percentage if participants that have loans: 13%

• Prevalence of In-Service Distributions: 86% of plans allow for Hardship Distributions

(Source - 2019 Defined Contribution Plan Report) - Plan Design

Best Practices For ERISA P lans Today

• Auto-Enrollment: 73% of plans

• Auto-Increase: 37% of plans

• TDFs as the Default Investment Option: 75%

• Most common default rate for auto-enroll: 3% (40% of plans)

• Most common escalation rate: 1% (70% of plans)

• Average participation rate of employees: 80%

• Average account balance: $102,000 ($5,000/year for 20 years; really ?)

• Average rate of contribution: 6.8%

(Source - 2019 Defined Contribution Plan Report) - Plan Design


• Prevalence of match: 76%

• Most common match: 100% on 3% (36% of plans) and 50% on 6% (31% of plans)

• When is the match received? 80% of plans immediate eligibility

• Employees that take full advantage of the match: 26%

• Total Employer Contribution: 3%-4% (34% of plans)

• Most common vesting schedule: Immediate on enrollment (36% of plans)

• Most common use of forfeitures: Reduce employer contributions (27%)

(Source - 2019 Defined Contribution Plan Report) - The Match


• Most common type of investment vehicles: Mutual Funds: 94%

• Prevalence of Target Date Funds: 81% of Plans

• Number of investment options: 25

• Number of investment options held by participants: 5.5

• Semi- annual Plan Committee Meetings/Quarterly Reporting: 62% of plans

• Most common way for Sponsors to help participants manage retirement income - Systematic

withdrawal: 45%, In-plan professional help - 27%

• Percentage of plans that use funds that have Revenue Sharing in funds? 43% unsure, 32% yes,

25% no

• A Fee Equalization Policy : 32% yes; 16% no will develop soon

(Source- 2019 Defined Contribution Plan Report) - Investments


• ERISA Revenue Recapture Account: 49%, yes

• Who pays the fees? 51% plan participants; 34% Employer; 15% both

• Benchmarking fees: Yes, 46%

• Engage With Investment Fiduciary: 53 % of plans have; 34% unsure

• Investment advice to participants: 80%, yes

• Open-Architecture Fund Platform: Don’t care what the % is must do

• Investment Policy Statement: Don’t care what the % is must do

• Memorialize Meetings: Don’t care what the % is must do

(Source- 2019 Defined Contribution Plan Report) - Investments


• Investment Committee: Yes, 78% (have to have)

• Investment Policy Statement: Yes, 69%

• IPS that addresses TDFs: Yes, 56% (have to have)

• 3(16) Plan Administrator Services: 53% (wow!)

• Most employees will achieve their retirement goals: 21% (what do we do?)

• Responsibility to improve the “financial wellness” of employees: 60%

• Gauges of success of retirement plan: participation rates 72%; deferral rates 58%; saving to

the match 23%

(Source – 2019 Defined Contribution Plan Report) - Oversight/Governance

Big Topics/ Industry Trends

• “Retirement Readiness” encourages employers to help their employees look at their retirement

account balances and help them determine if they are saving enough for a successful retirement

(we know for the most part that they’re not).

• “Financial Wellness” looks at employee/participants health, not just from the standpoint of their

wealth (which is a one-dimensional look) but from the Health & Welfare needs as well, thus giving

a more complete view of the employee.

• Roth feature: is gaining ground because of low tax rates. There’s been a initiative to help

employees figure out whether they should save on a “pre-tax” or “post-tax” basis. Very important

to know what to do here now that we have both options.

• Annuity Options: as people are living longer and as account balances are lower than they need

to be, Plan Sponsors are looking to provide distribution options that people can’t outlive

• Cybersecurity/Data Security: there are trillions of $’s in retirement plans and data is considered

a “plan asset”. How is this being protected?

• The ERISA litigation environment: is very active and has focused in on Plan Committees for

breach of Fiduciary duty because of issues regarding Share class, Revenue Sharing,

compensation to Record Keepers and other service providers.

ERISA Litigation - Background

• In 2006 and 2007 Schlichter Bogard & Denton filed 18 class action lawsuits

against 18 of the largest U.S. Corporations alleging breach of fiduciary duty.

In 2015 and 2016 at least 20 more cases were filed including suits against

large universities, (Duke, Penn, Emory, Northwestern, Vanderbilt, John

Hopkins, Cornell, USC, MIT, NYU and Yale)

• The suits contained allegations of excessive fees, imprudent investment

options, too many investment options, inadequate participant disclosure,

use of actively managed funds vs index funds, fees exceeding industry

benchmarks, inadequate participant disclosure, failure to properly oversee

and monitor the plans and failure to routinely conduct RFPs

ERISA Litigation - What We Have Learned ?

• Overall the last year was a good year

• No need to have an RFP every 3-5 years. ERISA contains no such

requirements

• ERISA also contains no limit on the number of funds a plan should

have

• If a Sponsor uses outside expertise (a registered investment

advisor), that helps evaluate fees on a regular documented basis

that works

ERISA Litigation - What We Have Learned ?

• Courts are using reasonable judgement and if plan sponsors can

document a prudent process. Sponsor doesn’t have to be perfect or

even right.

• Court found underperformance happens . The court would not

second guess the Plan Sponsor, as long as they could document a

prudent process. The Court said that the investment strategy and

fund information was disclosed and participants had the opportunity

to invest in other funds.

• Disclosure and due diligence protects.

ERISA Litigation - Not Going Away

• It takes one unhappy participant. The attorneys are actively looking

for participants

• Sponsors may be very confident that they are correct but the

decisions aren’t uniform, the results vary from jurisdiction to

jurisdiction, Companies don’t want their executives and committee

members being sued so companies will settle

• Attorneys get 1/3 of the settlement

Big Topics/ Industry Trends - C ol lege Tuition Debt

• College degrees are common place today

• College Tuition Debt is a bubble equal to the “housing crisis”

• Tuition increases are rising faster than inflation

• This debt effects not only Millennial's and “Zs” but the Boomer (the parents)

• This debt is effecting saving rates for the US and retirement Plan savings

• This debt is delaying Millennial's and “Z’s” renting and buying housing

• This debt is creating tremendous financial and emotional stress for all involved

• Retirement accounts contain participant’s largest assets outside of their homes

• Can we incent payment of tuition debt through our retirement plans?

Retirement Plans’ Role In Paying Down Student Debt:

Using Your 401k to help with Student Loan Debt

• The IRS issued a Private Letter Ruling on May 22, 2018 allowing an employer,

believed to be Abbott Labs, to amend their 401k plan to offer a student loan benefit program

which would allow the employer to make a non-elective (NE) PS type contribution for

employees with student loan debt. Technically a PLR only applies to the firm to which it is

issued but it does indicate that the IRS does not have an issue with this idea

• Provisions of the PLR:

– an employee must elect to enroll and may opt out of enrollment on a prospective basis

– an employee participating in the program can still make elective contributions to the plan but would

not receive a match

– If an employee makes a student loan repayment during a pay period equal to at least 2%, the

employer will make a 5% NE contribution, it is not a match for that pay period. The NE contribution

is made whether the employee makes any deferrals during the year

– If the employee does not make a student loan repayment for a pay period equal to at least 2% of the

employee’s eligible compensation, but does make an elective contribution during that pay period

equal to at least 2% of the employee’s eligible compensation for that pay period, then employer will

make a matching contribution equal to 5% of the employee’s eligible compensation for that pay

period

Using 401k to help participants with Student Loan Debt

• A bill has been introduced that would allow all employers to make a

contribution to the 401(k), 403(b) and SIMPLE IRA accounts of employees

that are paying down student loan debt effective in 2020

• What you can do now to help employees?

– You can make the same type of Employer Profit Sharing Contribution

mentioned in the PLR. If you have a new comparability profit sharing formula

that puts all employee participants in their own group. Most of the

participants that have student debt are going to be non-highly compensated

employees. (NHCEs) In a new comparability plan you can decide on a

different contribution for each employee as long as you can pass discrimination

testing. Additional contributions for NHCEs are not going to cause you to fail

discrimination testing

Questions?

Thank you for joining us!

Speaker Bios

Alan Pfeffer Senior Vice President

Tel: 516.414.8311 | [email protected]

Alan has been an Employee Benefits Consultant for both profit and not-for-profit businesses for more than

thirty years. He joined Sentinel Benefits & Financial Group in 2011 as part of the merger with Geller Group,

where he acted as Managing Director.

Alan’s area of focus has been in the design, implementation, communication, and administration of qualified and

non-qualified retirement plans. His expertise also includes evaluating the effectiveness of retirement plan

investments, and he is a senior member of the Sentinel Pension Advisors RIA team.

He has obtained the designation of Accredited Investment Fiduciary (AIF®), the Qualified Pension

Administrator (QPA) from the American Society of Pension Professionals & Actuaries. and FINRA Series 6, 63

and 65 securities licenses.

Speaker Bios

Lisa Jones, Esq., CPC, QPA Senior Vice President,


Lisa’s new role involves using her technical knowledge to help retirement plan sponsors minimize their

fiduciary risk through better plan investments and improved retirement plan recordkeeping/TPA

services. Prior to April 1, 2019 Lisa was in charge of our ERISA Consulting Group and was responsible

for internal and external technical support and compliance regarding ERISA and the Internal Revenue Code.

Her department helped clients resolve operational and document errors before they were discovered on

audit through use of the IRS and DOL correction programs, and helped clients with IRS and DOL plan audits.

In addition, her group was responsible for retirement plan documents for both qualified and nonqualified plans.

She regularly makes presentations internally and to clients and conducts continuing education workshops for

industry professionals on employee benefit related topics

Presented by:

Gregory Feigenbaum,

VP & Senior Benefits Consultant

From A to (Gen) Z

Managing a multi-generational workforce

New York

Lunch & Learn 20

19

Agenda

The Different Generations

Workforce Statistics

The Obstacles They Present

Who They Are

The Benefits

Tips

The Generations

The Silent Generation

1928 – 1945

Baby Boomers

1946 – 1964

Gen X

1965 – 1980

Millennials (Gen Y)

1981 – 1998

Gen Z

1998+

Workforce Presence :

5% 25% 33% 35% 2%

Statistics In the Workforce

• 56 Million Millennials

• 53 Million Gen X

• 41 Million boomers

• 9 Million Gen Z

• 3 Million Silent Generation Millennials

35%

Gen X 33%

Boomers 25%

Silent 5%

Gen Z 2%

In 2019, the youngest Boomers are 55

and the oldest Boomers are 70!

Benefit Obstacles

• Company culture

• Communication styles

• Negative stereotypes

• Loss of knowledge and experience

• Delivery Issues

• Cultural expectations

C onfusion between “generation” and “life-stage”

“Differences can be masked as age-related, so something that

might seem age-related isn't necessarily. A lot of the age issues

aren't with a company being uncomfortable with a particular age-

group, but with particular people in an age-group not being

comfortable with the company.”

— Kabir Shahani, Appature

IN THEIR

LIFETIMES

WHAT THEY’RE

LOOKING FOR

TECHNOLOGY

GRADE

HOW TO SPOT

THEM

PREFERRED

COMMUNICATIO

N CHANNELS

BENEFIT

CONCERNS

• WWII

• Great Depression

• Advent of rock n’

roll, TV, kitchen

appliannces

• Mass production

(automobiles)

Ways to stay active

in retirement

Lived through massive

advancements in

communication

Household budgets,

family mementos

• Face-to-Face

• Landline telephone

• Written

correspondence

• Medicare

• Retirement

continuation

• LTC

• The Cold War

• Post-War Boom

• Woodstock

• Apollo Moon

Landings

• Civil Rights

Movement

A profitable ‘first’

semi-retirement

Early information

technology adopters

Television, AM/FM

radio, physical

newspaper and

magazines

• Landline telephone

• Mobile phones

• Looking for rich

retirement plans

• Medicare

discussion

• Caring for

parents

• College expenses

• End of Cold War

• Fall of Berlin Wall

• Dot com Boom (and

bust)

• Integration of mobile

phones into everyday

life

Work-life balance Digital immigrants

Personal computer,

‘old school’ video

games, wearable health

tech, satellite radio

• Email

• Retirement

planning

• College funding

• Family focus

• Caring for

parents

• 9/11 attacks

• Rise of

Playstation/Xbox

• Birth of social media

• Reality TV

• Google Earth

Freedom and

flexibility

Digital natives; mobile

phone and social

media’s earliest

enthusiasts

High end mobile

devices for

personal/professional

use, jeans and sneakers

in the workplace

• SMS

• Instant message

• Mobile phone calls

• Email

• College debt

• Modest

retirement

planning

• HDHP medical

plans

• Touchscreen mobile

devices

• Energy, economic,

environmental crisis

• Social media

• Cloud computing

A bright future

Technophiles raised

in wireless, social, and

always connected

world

Smartphones, digital

school work,

Artificial intelligence

(Alexa),

Wearable tech (Google

Glass)

• SMS

• Social media

• Wearable tech

• Getting hired

• College debt

• Little medical

Concerns (on

parents’ plans)

The Silent

Generation

Baby

Boomers

Gen

X

Millennials

(Gen Y)

Gen

Z

The Newest Generation in the Workforce: Gen Z

Work-Life Balance Structured Flextime

Telecommuting

Health Prioritization

High Touch, High Tech Communication through

face-to-face meetings

Supportive Leadership

Technology as a necessity, not a bonus

Embracing a Multi-Generational Workforce

• A multi-generational workforce can create a vibrant company culture

– Each generation has varying upbringings, values, and interests that bring something different to the

workplace

• Many companies see a multi-generational mix as an opportunity to benefit from a

diversity of attitudes and skill sets

– Baby Boomers bring deep experience, creditability and wisdom

– Baby Boomers have traditional business skills, these include having exceptional interpersonal skills

and perform well in environments where traditional in-person communication is used.

– Gen X brings versatility and has the ability to bridge the gap between Baby Boomers and Millennials

– Gen X and Millennials tend to be better with technology and can offer insight into what products or

services your customers may want or need

– Millennials bring fresh ideas and a perspective not clouded by “the way things have always been done”

• Employees themselves can benefit from working with people of varying ages.

Employees are forced to step out of their comfort zones and begin to collaborate

with colleagues from all stages of life.

No one-size-benefit style f its al l

Leading a multi-generational team means that

you are managing people at different life stages

with different needs and expectations. It’s

important for managers to know and

understand these differences to successfully

manage their team.

The most important thing in a multi-

generational workplace is to make sure every

generation is valued and understood.

Tips on retaining & recruiting employees

Benefits EEs are looking for

Flexible work arrangements

Work From Home programs

Job Sharing

Unlimited PTO Programs

Sabbatical Programs

Career pathing – sharpening the saw

Get to know your employees on a personal level

Flexibility:

A survey by Flexjobs.com show that 82% of Millennials and

81% of Gen X site work life balance as a top factor when

considering a new job.

Creating flexible work arrangements can be helpful to all

generation at their different life stages. Also, having a culture

that truly supports work flex and work life balance.

Companies should consider:

• Flexible work arrangements

• Work From Home programs

• Job Sharing

• Unlimited PTO Programs

• Sabbatical Programs

Companies need to create a workplace that is open and flexible to different

ways of working and work attitudes. Companies should also consider

moving away from a “conventional work hours” module and start focusing

more on the end work product.

C ommunication:

• As different generations bring different

expectations to the office, frequent feedback,

evaluation and encouragement will be increasingly

important for managers to implement as part of

their daily work routines.

• Managers should focus on getting to know their

employee as a whole. Understanding what people

value and what motivates them makes it much

easier to communicate job expectations, offer the

right type of support, or even make adjustments

that will better suit a team's performance.

This is the first time that so many different generations are working side by

side, and it’s important that managers understand the different working

styles, attitudes, and expectations of their employees.

Training:

• Management Training: This is an opportunity to

educate and address the needs of all ages within the

workplace. It’s important for management to

understand the differences and work on being

adaptability to their workforce needs.

• Team-Building Exercises: These are a great way

to bring employees of different generations together

face to face, and can help break down some of the

barriers and miscommunications that might occur

during their daily work routines.

This is an opportunity to coach and train your managers, and break down the

barriers for employees on generational stereotypes.

Development :

• Millennials are likely to value training and new experiences and opportunities

• Gen X’s with young families are more focused on salaries and advancement

• Baby Boomers are less likely interested in new training, but they still value engaging work to keep them motivated

It’s more important than ever for managers to be aware of their employee’s

development needs and desires to make sure they are meeting the needs

for all generations.

Development C ontinued…

• Mentoring Opportunities: Have the more experienced generations of

employees act as career mentors for the younger generation, while at the same

time creating an environment where younger generations can inspire the older

workers with new innovative solutions and ways of working.

• Performance Management: Understanding what people value and what

motivates them makes it much easier to communicate job expectations, offer the

right type of support or even make adjustments that will better suit a team's

performance.

– Annual Performance Management Systems do not help nurture employees. Consider moving

to real-time feedback process. This allows managers to be more in tune with their employee’s

success and needs for support.

Questions?

Speaker Bio

Gregory Feigenbaum Vice President, Senior Employee Benefits Consultant


Greg joined Sentinel Benefits & Financial Group in 2015. He has over seventeen years of experience working

for/with insurance carriers and agencies and has been a trusted advisor and consultant to clients for all of their

group insurance needs. Greg specializes in the design, implementation, communication and administration of all

types of benefit plans (including medical, dental and other ancillary benefits) and is responsible for developing

custom plans to meet the needs and expectations of his clients and their employees. Greg has also help guide

his clients through the employer requirements the Affordable Care Act and ERISA. He has worked with

employers ranging in size up to 2,000 employees. Leaning on his carrier experience, he brings a unique

approach to find benefit solutions for his clients.

2019 new york lunch & learn - sentinel benefits...2019 lunch & learn financial planning and...

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