By Cyril Tuohy
Mobile technologies made further inroads into defined contribution retirement plans this month with Principal Financial Group’s announcement of new capabilities allowing employees to enroll in 401(k) plans using the texting functions.
Signing up via text begs the question, how much easier can it get?
Jerry Patterson, senior vice president of retirement income strategy at The Principal, said signing up via text acts as an antidote to the inertia many employees exhibit when it comes to signing up for their employer-sponsored retirement plan.
Nearly 50 percent of American workers have less than $10,000 in retirement savings and 70 percent of workers agree they are not saving enough to fund their retirement, according to studies released by the Employee Benefits Research Institute.
“We know people have good intentions, but while many eligible employees say they are going to take action, many of those same employees don’t,” Patterson, said in a news release.
Text-based enrollment allows employees to choose a contribution amount. Once workers confirm the amount, new participants can pick investment elections online or by phone, the company also said in a statement.
It was only a matter of time before retirement plan companies enabled text-based enrollment for their clients. For many companies with progressive retirement plan structures, paper gave way to the desktop computer and websites long ago. Desktop computers and websites, in turn, are ceding their place to mobile devices.
Principal and competitors like Transamerica Retirement Solutions, are among the retirement plan companies making it easier for plan participants to enroll, view account balances and even change asset allocations in their retirement accounts – all from the palm of their hands.
Principal’s latest announcement is part of what the company calls “a new approach” to workplace retirement plans that shift the conversation from the accumulation of retirement assets to retirement income.
Will texting boost retirement plan participation rates?
Patterson knows it’s an uphill battle. "Through our research we've learned there are some powerful forces in our nature that can get in the way of preparing for and becoming financially secure in retirement,” he said.
Last year, the company launched new retirement apps for mobile devices, as well as online resources for consumers, business owners and financial advisors to encourage workers to take action with regard to financing their future.
“Education and awareness are important. But at the end of the day, not effective without action,” Mary O’Keefe, chief marketing officer at The Principal, said in a release announcing the company’s new online resource.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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