Improving Retiree Outcomes Helps Employers

Mercer recently released a report that outlines why the firm thinks that it is a good business practice for employers to implement programs that will help employees to achieve a secure retirement. According to Securing Retirement Outcomes for the Employee: Why the Employer Should Intervene, the primary reasons the employer should take on this task are:

• The employer has the buying power and leverage to reduce costs that individuals otherwise would be unable to accomplish on their own.
  

• Helping employees to help themselves falls within the parameters of corporate social responsibility. This improves both the employment and social brand.
• Financial pressures are keeping employees in the workforce longer. Helping employees achieve retirement security will increase management flexibility for the employer and reduce severance costs.
• Employee engagement and loyalty improves along with the employer's efforts to help ensure a secure retirement. A good retirement program is the second most valued reward for employees after base salary.
• The greater the plan assets, the lower the asset management costs.
• Target-date funds that are properly designed to meet the needs of the workforce will be better aligned with those needs. Thus there also is better alignment with infrastructure investments that have already been made.
• A framework can be put into place to address the employer's fiduciary concerns.

Mercer has identified a "trilemma", noting that retirees cannot have their cake and eat it, too. According to Mercer, there are tensions among the competing objectives of access to capital, protection from risk, and participation in upside. Mercer suggests a variety of solutions to the trilemma.