Understanding the top 10 ways to optimize your retirement plan

Get prepared for the future

A defined benefit (DB) plan requires a careful balance between risk and reward. Companies offer these plans for several reasons, primarily to attract and retain talent, provide financial security to employees in retirement and foster loyalty and commitment among workers. However, the key to a successful DB plan lies in its management, which involves a delicate tightrope walk between managing risk, ensuring financial viability for the plan sponsor and offering financial security for retirees.

Fortunately, there are some easy solutions to ameliorate risk and make your plan run more efficiently, whether your plan is frozen or active. Here are the top ten ways:

1. Conduct regular death audits

Ensuring the accuracy of plan participant information is crucial for the efficient running of a pension plan. Regular death audits, a key component of pension plan management, play a vital role in this. By verifying the accuracy of plan participant information, they not only help businesses prevent invalid and fraudulent claims but also safeguard their finances and enhance efficiency, providing a sense of security and control.

The importance of death audits cannot be overstated. Their goal is to identify and remove deceased individuals from the plan's records, maintaining data integrity, preventing erroneous payments and ensuring compliance with legal and regulatory requirements. However, neglecting death audits can lead to severe consequences such as financial losses, reputational damage and legal liabilities, underlining their critical role in pension plan management.

2. Make sure your data is clean and ready

As discussed above, clean and accurate data is paramount to optimizing your plan. Incorrect information can lead to overpaying participants and other errors, so participant data must be clean, correct and up to date. Beyond payments, if a plan sponsor were to consider plan termination, unclean data would delay the process and add extra costs.

Implementing a data clean-up strategy is a significant step towards maintaining accurate information in a pension plan. This strategy, especially if paper files are involved, should be regularly maintained to ensure accuracy. Enlisting the help of a competent administrator, a crucial part of an effective data hygiene strategy, can greatly alleviate the burden. An administrator should handle all the heavy lifting of a data clean-up, making it a seamless process for the sponsor and highlighting the value of this resource in optimizing pension plans.

3. Considering pension risk transfer

Over the past decade, pension risk transfers (PRTs) have become a popular way for plan sponsors to manage risk. A PRT is when a company transfers some or all its pension obligations to an insurance company or financial institution. It enables the company to reduce or eliminate the financial risks associated with managing a pension plan, such as investment, longevity and regulatory risks. By offloading these risks to another party, plan sponsors can better manage their financial exposure and liabilities while ensuring the stability of pension payments to retirees.

Check out our free calculator to see how much a company could potentially save with a PRT.

4 Reduce liability with a lump-sum window

A lump-sum window is a specific period during which DB plan participants receive a one-time lump-sum payment instead of monthly pension payments for the rest of their lives. A plan sponsor might choose to offer a lump-sum window to manage pension liabilities, reduce investment and longevity risk, reduce ongoing administrative costs, or take advantage of changing regulations or accounting provisions.

Not only are lump-sum payments advantageous for plan sponsors, but they can also be the optimal choice for some participants. Opting for a lump sum empowers individuals with flexibility and control over their own money, opening up wider investment opportunities and reducing longevity risk. This option puts the decision-making power in their hands, allowing them to shape their financial future according to their needs and goals.

Learn more about the benefits of lump-sum windows in our guide.

5. Take a deep dive with an independent review

If you’re not sure that your DB plan is on the right track to help your company reach its goals, a review by an unbiased actuary can open up new possibilities for the plan’s health and management. This can empower you to make the most informed decision about its future, potentially leading to improved financial stability and better risk management. Forensic and wellness checks will review the plan’s funded status, expenses, PBGC premiums, contribution policy, actuarial assumptions and plan termination costs.

Armed with a comprehensive understanding of these aspects, you can chart a course for the future. Whether it's freezing and terminating the plan, maintaining the status quo or modernizing it, the review equips you with the knowledge to make the best decision for your company.

6. Modernize your plan design

When DB plans became associated with high and volatile costs a few decades ago, employers started to shift the risk onto individual employees via 401(k)s. However, many Americans miss the guaranteed lifetime income offered by DB plans. New modern plan designs combine the best features of both plan types, allowing plan sponsors to offer a modern, innovative plan design that not only works better for everyone involved — workers and employers — but also provides a more secure and predictable financial future for employees.

These cutting-edge plans are sustainable with stable contributions and minimal risk for plan sponsors. This reduction in risk is not at the expense of employee benefits, but rather, it fosters employee loyalty and engagement. There's no need to choose between traditional DB or 401(k)s when a hybrid plan can offer the best of both worlds, with added security for plan sponsors. Explore this further by learning about October Three’s innovative O3 PRIME plan.

7. Evaluate the entire retirement program and how plans work together

When a plan sponsor offers multiple retirement plans, it can be a complex situation for the company and its employees. However, it also offers a unique advantage for the employees. For instance, if employees are offered both a DB and a 401(k) plan, they have the opportunity to understand how these plans can work together to provide an optimal savings strategy. This empowers them to make the most of the features and work towards their retirement savings goals.

While offering more than one retirement program can quickly become complicated, there is a solution that can simplify this process and provide the best of both worlds. A cutting-edge, holistic plan design like O3 PRIME not only simplifies the management of multiple plans but also offers immense retirement planning benefits. This solution can be easily communicated to employees, instilling a sense of optimism about their retirement planning.

8. Streamline plan administration with technology

Plan administration is a critical component of the DB universe. However, the use of outdated technology by most recordkeepers is a significant issue. This technology, typically no longer updated, hampers the participant experience and adds unnecessary work and costs for the administrator and sponsor. These old systems can create a heavy workload, generate unnecessary expenses and cause frustration among sponsors and participants alike.

That’s why October Three developed a streamlined, state-of-the-art plan administration platform. Our web-based Daily Platform is highly convenient, modern and easily customizable, empowering the participants to have everything they need in one spot with one login. It also allows plan sponsors to choose when and how much to get involved, while providing immediate access to administration information with full transparency and fewer extra costs.

We invite you to experience the difference in a free demo of our Daily Platform.

9. Outsourcing administration services

If you’re currently administering your DB plan in-house, you can save time and money by outsourcing administration services. A third-party provider, like us, should understand the administration experience that modern participants and sponsors need. We offer a support structure that not only delivers on these needs but also brings additional benefits such as transparency and increased efficiencies.

Outsourcing simplifies the administration experience for sponsors and participants, from implementation to call center services and day-to-day management. Find out more about our administration offerings.

10. Make sure participants understand the plan and love it

A robust retirement program is a valuable investment, and its worth is amplified when the employees understand its value and love the benefits. That’s why it’s vitally important that you communicate its advantages at every opportunity. To make it compelling, focus on employees and the well-being of their families when discussing the benefits program because it helps them feel appreciated.

Keeping participants engaged is one of the reasons our Daily Platform offers a 24/7 account balance. We believe in transparency, and people deserve to know how much their benefit is worth and be able to access it on a modern platform.

Need help improving your employee benefit communications? See how October Three can help.


Optimizing retirement plans is crucial for plan sponsors to ensure retirees have a comfortable income during their retirement years, all while effectively managing business risks and maximizing returns. While it may seem daunting, the above solutions offer a clear path to achieving this goal. Not every strategy is a one-size-fits-all solution, but it is effective when appropriately conducted.

Given the significant inflationary pressures of recent years, saving enough for retirement has become a major concern for many Americans. Employees increasingly rely on their employers to help them secure retirement. Therefore, consider optimizing your plan now to ensure the best outcomes for your company and employees.

About October Three | Our mission is to help employees achieve better retirement outcomes with forward-thinking plans that meet employer needs. As a consulting firm and one-stop-shop, October Three has the administrators, actuaries and consultants to design programs and then administer them — leading clients through every step of the plan journey.

Want to start optimizing your plan now? Get a free wellness check.