The US Retirement Plan Industry is on the brink of significant changes. As society moves into an era characterized by an aging population, the need to offer employees retirement stability becomes increasingly vital.

According to a survey by TRANSAMERICA Institute, 80% of employers are struggling with economy-related concerns. They indicate major pain points such as inflation, recession, supply chain, and employee retention.

To meet the evolving employee demands, plan sponsors strive to provide better retirement options for their employees. The report states 42% of employers say they are likely to start offering a retirement plan, while others are turning towards solutions, such as Multiple Employer Plans (MEPs) and Pooled Employer Plans (PEPs).

This article will delve into the industry’s shifting landscape, examine key upcoming changes, and highlight the benefits and importance of outsourcing retirement plan administration to meet these challenges.

Plan sponsors embrace retirement plans

The employee sentiment is changing significantly as 72% of survey respondents are concerned about their retirement and do not rely on social security. Responding to the changing needs of the employees, 81% of employers believe that offering a 401(k) plan is essential for attracting and retaining employees.

Amongst those still waiting to offer a 401(k) plan, 42% of employers may start one in the next two years. In addition, there is a growing interest among plan sponsors in offering MEPs and PEPs. These plans enable smaller businesses to pool their resources and provide comprehensive retirement benefits to their employees without the burden of administering the plan themselves. By combining the assets of multiple employers, around 54% of plan sponsors intend to achieve increased savings while reducing risks and administrative workload.

Changes for recordkeepers and retirement plan administrators

As plan sponsors become more interested in providing MEPs and PEPs, recordkeepers and retirement plan administrators face increasing complexity. The workload and the number of plan participants are expected to grow, which will strain retirement plan administration and service providers.

In addition, there will be an additional burden to navigate the compliance intricacies of the Department of Labor (DoL) and the Internal Revenue Service (IRS). The rapidly rising number of participants will require more efficient and secure recordkeeping.

Overcoming the challenges with outsourcing

In light of these disruptions, outsourcing your 401(k) plan administration is a strategic measure to achieve success. It will help you stay ahead amidst rising competition in the retirement plan industry.

Outsourcing offers numerous benefits that can help recordkeeping businesses and retirement plan administrators navigate through the US retirement industry’s evolving era. You can expect the following benefits:

  • Cost reduction: Outsourcing allows you to take advantage of economies of scale. It reduces overall costs related to the administration of retirement plans for all your clients. You can also save on administrative costs such as payroll processing time, recordkeeping, and compliance activities.
  • Operational efficiency: Outsourcing partners like Congruent Solutions have specialized technology solutions for the retirement plan industry. You can rely on our rapid yet accurate processing of participant data and effective handling of other plan management tasks.
  • Reliable advice from industry experts: Experts from the retirement plan industry can provide valuable insights based on their in-depth knowledge. Our team comprises retirement plan industry experts who have spent over 15 years in the industry. Besides their experience, they also stay updated with the latest trends.
  • Reduced risks: By entrusting your 401(k) plan administration to experts, you can reduce compliance and cybersecurity-related risks. We can help you address retirement plan issues and comply with the latest regulatory requirements.
  • Better compliance: Outsourcing partners help you stay current on ever-evolving compliance regulations. Our retirement plan administration solutions ensure all IRS and DOL regulations are complied with to avoid penalties for non-compliance.
  • Timely reporting and form filing: Plan administration involves seasonal activities like preparingForm 5500 and Compliance Testing. You can outsource these labor-intensive tasks to ensure they are completed on time.

Gear up for the future

The future of the US retirement plan industry is convoluted and rapidly changing. Plan sponsors are struggling with complex regulations, dynamic market conditions, and the need to ensure that their 401(k) plans meet the needs of their employees.

Effective retirement plan administration demands adaptive solutions to overcome the increasing complexity and workload. Besides outsourcing, you need advanced retirement plan administration software to help you stay compliant, engage participants, and maximize profitability.

You must anticipate an automated future for your 401(k) plan administration. The increased use of AI technology and automation tools will drive higher participant engagement and plan efficiency. Moving over legacy systems and traditional recordkeeping methods, you must adopt new digital platforms that help streamline plan management and reduce administrative burden.

With the right 401(k) plan administration software and recordkeeping solution in place, you can quickly deliver upon client needs, fiduciary demands, and participant expectations. In addition, it helps identify problems within your 401(k) plan, helps streamline participant data management processes, simplifies compliance monitoring, and provides comprehensive reporting capabilities.

Leverage technology to perform better

Using retirement plan administration software ensures several key benefits for recordkeepers and retirement plan administrators:

  • Automated compliance tracking: The software’s automated compliance tracking feature helps identify risk areas and flag errors quickly. It can simplify complex regulations and track all plan changes in real time.
  • Increased participant engagement: Retirement plan administration software can provide personalized service and tailored communications catering to each participant’s unique needs. It will enable you to increase participant engagement in the 401(k) plan and boost their satisfaction.
  • Improved efficiency: The automation features in the software will allow you to complete tasks quickly and reduce manual data entry. It will also ensure timely reporting and filing of crucial forms and compliance documents.
  • Robust reporting: Retirement plan administration software can provide detailed reports and analytics on all 401(k) plan aspects. It will give you real-time secure access to participant data and ensure better visibility into your operations.

Investing in the right retirement plan administration software can help reduce manual errors, stay compliant with ever-changing regulations, and deliver an improved participant experience. In addition, it will help streamline recordkeeping processes and increase efficiency across all areas of your retirement plan administration.

The CORE benefit

CORE 2.0 by Congruent Solutions is a comprehensive 401(k) plan administration software that anticipates the challenges of the evolving retirement landscape. It offers a secure and robust platform for plan administrators to manage their retirement plans. In addition, our AI-powered software provides intuitive tools to simplify complex compliance tasks and automate manual processes.

CORE 2.0 helps you stay on top of compliance regulations, drive participant engagement, and maximize operational efficiency. The microservices architecture of the software enables plan administrators to customize solutions based on specific needs. It has secure data storage, automated compliance tracking, and robust reporting capabilities. Take your 401k plan administration and recordkeeping to the next level with Congruent’s industry experts and CORE 2.0 retirement plan administration platform. Stay prepared for the uncharted future of the retirement industry.