AFTER MORE THAN 30 years, despite hundreds of millions of dollars being spent each year on employee communication and education, many American workers still make poor choices in how they utilize defined contribution plans. For example, many eligible employees are still not participating in their company’s retirement savings plan. Those that are participating don’t always take advantage of the maximum contribution limits in their retirement savings plan. Many fail to diversify or rebalance their accounts.

According to the April 2007 EBRI Retirement Confidence Survey, only  49% of workers think they need to accumulate at least $500,000 by the time they retire to live comfortably while fewer than 2 in 10 expect to need more than $1 million.  The sense of urgency doesn’t seem to exist.

As a result, over the last several years we have seen some major changes in the retirement marketplace. There has been more focus on overall plan performance in helping employees prepare for retirement.

What is meant by plan performance and what are the measures of a successful plan?

Overall plan performance now encompasses a broader definition than just investments to include important measurements on how well prepared employees will be for retirement:

•          Are employees participating in their plans?

•          Are employees contributing enough to support the retirement they imagine?

•          Are they investing in a diversified combination of funds that is allocated appropriately?

Effective overall plan performance can mean greater plan success and increased retirement readiness for employees.

How can plan performance help drive retirement readiness?

Consideration needs to take place for helping drive appropriate plan design, helping with education, and focusing on continuous measurement to determine how much of an impact you have made in terms of driving plan performance and meeting the plan’s objectives.

Appropriate plan design may help make the elements of plan performance simpler. Services like automatic enrollment, automatic deferral increase and default investments can help overcome employee inertia. A proven, effective educational program can help drive employee action. Continuous measurement, such as client-specific planning and benchmarking, can help show progress toward your clients’ goals.

With a renewed focus on the potential measures of a successful plan, you can help prepare your clients’ employees for retirement readiness.

For more information regarding this educational opportunity from the Fidelity Advisor 401(k) program please call us at 1-800-684-5254.

For investment professional use only.

Not NCUA or NCUSIF insured. May lose value. No credit union guarantee.

Before investing, have your client consider the funds' investment objectives, risks, charges, and expenses.  Contact Fidelity for a prospectus containing this information. Have your client read it carefully. 

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Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA  02109

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