More Employers Are Outsourcing Benefit Administration

One in three employers outsources all of their benefit administration, up 20% since 2013, according to a study by the Guardian. Employers are also using more vendors for support. Nearly two-thirds that outsource some benefit administration use multiple vendors, up from 48% in 2013. Employers of all sizes are realizing the need to improve efficiency; keep compliant with requirements of the ACA, FMLA, and ADA; and improve the enrollment experience. They will need to rely more on external expertise to meet their goals, according to the study.

Only half of employers say their company is very effective in tracking and managing employee leave, including FMLA, disability, and other paid-time off. Nearly two-thirds of employers outsource some aspects of the enrollment process, such as preparing enrollment materials (49%) and presenting at enrollment meetings (48%). Only 31% outsource the development of their enrollment strategy. Having a decentralized approach lessens the effectiveness of enrollment activities. It’s best to outsource enrollment strategies to integrate services that support employee decision-making, according to the study. Ray Marra, senior vice president, Group Products at Guardian said that outside expertise can help companies transform their benefit package with a broader range of employee benefits and related services. For more information, visit

Small Plan Participants Miss Out on Retirement Fund Investment Options

Small plan participants are missing out on investment options in their 401(k)s according to a Guardian survey. Plans for small businesses generally have fewer plan features, services, and investment options. Some of the major differences between small and large plans include the diversity of investment options, the ability to purchase stock in the company, and access to fixed-rate accounts. Also, small market participants are less knowledgeable and less engaged in their plans. According to the Guardian, this is particularly important since 401(k)s and other defined contribution plans are, by far, the largest anticipated source of retirement income for plan participants. The lack of options and services demonstrates an opportunity to enhance plan design and investment features available to small plan participants.

Douglas Dubitsky, vice president at Guardian Retirement Solution said, “Americans rely almost exclusively on their 401(k) accounts for their retirement income, so making access to a broad range of investment options and support for employees of every size company is critical for better retirement outcomes.”

Small and large plan participants don’t understand investment terms. Most participants have heard the terms “contribution rate” or “vesting” or have heard about loans from their accounts. But many don’t understand how they affect retirement planning. Small market participants generally have less access to support and appear to be less knowledgeable and therefore, less engaged in their plans. Guardian Retirement Solutions has developed the RetirementConnect education program.

Employees Need Customized Benefit Communications

A survey by The Guardian reveals that employees prefer benefit communications that are customized to their needs. Early entrants to the workforce (those within the first five years of working) want more choice and education in the workplace. Near-retirees (those within five years of retirement) value their benefits and worry about losing them in retirement.

Early entrants have a strong desire for financial education and guidance to help them focus on their immediate financial needs, such as paying bills, job security, work/life balance, and reducing debt. Nearly two-thirds of these younger workers say that buying insurance and saving for retirement through their employer is easier than doing it on their own, and 56% prefer learning about financial planning and products at work compared to 44% of those near retirement.

Near-retirees are most concerned about maintaining adequate health insurance, having a comfortable retirement, staying healthy, and having enough savings. While 93% of respondents in this age group say that it’s important to have retirement savings that last as long as needed, only 62% say they have achieved this goal.

Sixty percent of all employees say that their benefit meetings would be more relevant if they were targeted by age. Those within the first five years of working need more personal advice during enrollment. If employers increase access to education and advice, it can benefit the nearly 70% of early entrants who say that it is very important to find a trusted source of financial advice. Unfortunately, only 33% of employers place high importance on tailored communications, and only 13% have implemented such an approach

Professional Support Boosts Satisfaction of 401(k) Plans

401(k)supportSixty-one percent of plan sponsors who work with a financial professional are very satisfied with their 401(k) plan compared to only 40% of sponsors who don’t use a financial professional, according to a survey by Guardian. Ninety percent of plan sponsors consider their 401(k) to be successful when it helps them recruit and retain good employees, helps them offer competitive benefits, and helps them secure an adequate retirement income for their employees. About 90% of employers say that their 401(k) is successful in making retirement savings easier, providing planning tools, encouraging systematic savings, and helping employees fund a secure retirement.

Forty-six percent of small businesses surveyed did not offer a retirement plan, with many citing the potential expense as a deterrent. However, 58% said that they were interested in setting up a plan within the next three years. “This, coupled with the fact that nearly 30% of business owners did not know which type of plan was best suited for their company, illuminates the huge opportunities for financial professionals in the small-plan market,” said Douglas Dubitsky, vice president at Guardian Retirement Solutions.

While the majority of plan sponsors are satisfied with their retirement plans, underlying fees and expenses are major concerns. Additional concerns include the staff and executive time required to manage the plan along with the need to educate employees to manage their investments.
The study also reveals that small business owners are confused by their fiduciary roles and responsibilities with nearly one in five not satisfied with fiduciary support. Additionally, almost one-third of plan sponsors did not realize they were the plan fiduciary. Plan sponsors who work with financial professionals are more knowledgeable about plan requirements, including their fiduciary responsibilities. Those who work with financial professionals generally offer plans that are better designed and include more advanced features, such as an employer match, target date funds, and a managed account option. Small-plan sponsors are increasingly realizing the value of working with third-party support services and financial professionals for outsourced solutions that help save time and mitigate fiduciary risks. “This, and the fact that many non-sponsors are extremely confused by their options in the 401(k) market, reinforces what we have seen at Guardian for a long time — there are more and better opportunities for financial professionals in the small-plan retirement market than ever before,” he said. For more information, visit

How Workers View Their Benefits

While today’s American workers do value their benefits, there is significant room for improvement, according to a survey by the Guardian. American workers, on average, have a score of 6.8 (based on a scale of one to 10) on how much they value their benefits. The following are highlights of the survey:
• Industries with employees that score highly on the Benefits Value Index include public administration and education, as well as healthcare and finance/insurance. Conversely, automotive, transportation/warehousing and accommodations/food services are industries where the perceived value of benefits among workers is likely to be lower.
• The majority of employers offer benefits to attract and retain talent. Two-thirds of workers feel that employee benefits are very important when deciding to stay with an employer. Seventy-two percent say that benefits are very important when deciding whether to take a new job.
• More than 9 in 10 workers are interested in receiving personalized recommendations about benefits and coverage levels from insurance carriers for benefits and coverage levels. Not coincidentally, these workers score very highly on the Benefits Value Index. Content that is targeted to a worker’s background, life stage or even household can allow workers to make more informed decisions about their benefits and ultimately lead to greater confidence that they have made the right decisions.
• While online remains the preferred enrollment channel, employees have a clearer sense of satisfaction with their benefits when they have the option of selecting their own channel of enrollment. They also tend to have a longer tenure with their employer.
• As workers start to value the benefits their employers offer, they are likely to feel that the benefits are useful and that their employers consider employee benefits a priority in their goals of attracting and retaining top talent. Understanding the value is a key to employee engagement, and, in turn, leads to workers that are engaged, as well as healthier, happier and more productive.

To view the study, visit

Last Updated 08/10/2022

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