The upcoming 2024 presidential election is poised to bring significant changes that could directly impact employee benefit plan sponsors. As we navigate this pivotal election season, it’s essential to stay informed to help you manage your responsibilities and keep your employees’ retirement plans strong and secure.

What changes could be on the horizon and how could they impact retirement plans?

1. Short-term market volatility: Political uncertainty can impact the financial markets, and therefore, impact retirement savings. Although, over the long term, the election effect on the market has been historically limited, it is often recommended to maintain your long-term retirement strategy during this short-term period of volatility.
2. Changes in policies and regulations: Changes in the administration and Congress can lead to new policies and legislature that may affect how retirement plans are managed and administered.
3. Changes in investor outlook: Presidential elections can influence investor outlook and confidence in the economy. This may affect individuals’ investment decisions, such as reducing or stopping their contributions, shifting risk tolerance or changing their investment portfolio allocation. It is not recommended to base investment decisions solely on the election outcomes, but rather on more impactful financial factors such as economic growth, interest rates and inflation.

What should plan sponsors do in preparation?

Here are some ways a plan sponsor can help their employees make the most of retirement savings while navigating the uncertainty of an election year:

• Communicate with employees often: Employers can use a variety of methods to communicate with employees about their plans, including multi-channel approach (emails, videos, webinars), in-person meetings, and personalized messages directly to employees. Communications should include reminders on existing plan policies, updates on new plan changes and provide information on how employees can get their retirement questions addressed.
• Offer educational resources and advisory services: Educate employees about the impact of elections on retirement and savings, highlighting retirement planning tools available on the third-party administrator’s website, hosting onsite 401(k) education meetings and offering advisory services with an investment advisor. Access to an investment advisor can provide personalized financial guidance to help put the employees at ease and on track to achieve their retirement savings goals.
• Emphasize diversification strategies: By spreading investments across various asset classes, employees can reduce the impact of market fluctuation. By encouraging employees to focus on diversification, employers can help them maintain a balanced approach to retirement planning, even in uncertain times. Consider offering resources to employees to help them navigate diversification strategies.