One of the initial ramifications of the COVID-19 pandemic was the extreme disruption of financial markets around the globe. While there’s been some recovery on that front, retirement concerns still loom for employees and plan sponsors alike.
By and large, the United States’ economy is bleeding at the moment, as jobless claims rise and the vast majority of companies continue to encounter severe financial hardships that have an uncertain end date.
Despite this, it’s incumbent upon employers to provide proper resources and guidance to their employees who are no doubt experiencing financial stress and uneasiness. The best tool at an organization’s disposal is constant communication and transparency, said Vince Morris, president of retirement and wealth at OneDigital.
“It’s about having empathy and being able to provide reassurance, because this has been a tremendous impact globally from a financial and health standpoint,” Morris said. “They’re worried about their financial health and the financial impact to their company and whether or not they’ll have a job, so there’s a lot of different concerns out there.”
Another way to assist employees’ retirement plan concerns during this time is by utilizing a wealth of online financial tools. To do this, Morris suggested that companies should implement a COVID-19 task force internally to create structure around what resources they need to provide their employees.
One such resource, Morris said, is having someone available to discuss how an employee who receives a government stimulus check should go about utilizing it, given their particular financial situation. And, there needs to be an individualized approach to all of this. Most companies employ a wide age range of people and a 65-year old nearing retirement has far more immediate retirement plan worries than a 25-year old who likely has other financial concerns.
“The communication has to be tailored to the different demographics,” Morris said. “I think that employees more than ever really want advice. And they can only do so much of that for a self-service mechanism or online tool. It’s really important to have that human component or human interaction to just reassure them.”
While employee well-being is paramount right now, Morris said now is also a good time for organizations to review their retirement plan. Some things employers can look at are expanding their financial wellness offerings while also ensuring other features of the 401(k) plan are running smoothly. As it relates to recent regulation, Morris said employers should provide assistance for employees considering utilizing the hardship withdrawal provision included in the CARES Act, which allows for participants to sell investments from their 401(k) to create immediate cash if it means paying down debt or lowering minimum payments.
“This, like all things, will probably pass at some point in the future, so we don’t want employees to, for short-term fear, sacrifice their retirement outcome,” Morris said. “Obviously compounding rates of return and things like that really work to younger people’s advantage, so it would be a shame if people all of a sudden ran to their retirement accounts to empty them and then couldn’t replenish those accounts, so then they’re way behind the curve on the retirement side.”
About the Author
Brett Christie is the managing editor of Workspan Daily.