We've charted the evolution of defined contribution (DC) plans after conducting over a decade of plan sponsor and participant research. In this latest installment, we're seeing some helpful trends becoming the accepted standard. But there are also new frontiers that can further improve retirement readiness, as well as some problematic trends that need attention and change.
Most Plan Sponsors Find a Guaranteed-Income TDF Appealing
81% of plans found adding a guaranteed income TDF “appealing” to “extremely appealing”
38% of plans say they are considering adding a guaranteed income TDF over the next two years as a part of the changes they are making to their organization’s plan design
Sponsors Take ESG Seriously, but Many Are Not Sure Which Way Is Best
66% of Sponsors See ESG
Integration as a Call of Duty
42% of Sponsors Grapple with ESG Choices
Plan participants in favor too ― 90% of plan participants think it’s important that the investment options within their workplace retirement savings plan should adhere to their core ethical values
70% of plan sponsors consider themselves Plan Fiduciaries 30% of plan sponsors do not see themselves as Plan Fiduciaries
Plan Sponsors Who Consider Themselves, Personally, Plan Fiduciaries
Those Who Do Not See Themselves as Fiduciaries
Reenrollments are on the rise. It is a powerful way to steer employees into effective investment options and provide fiduciary safe harbor to plan sponsors who reenroll into a target-date fund QDIA.
of plan sponsors say they've conducted a reenrollment during the past three years
Engagement with the organization listed as top impact of offering Financial Wellness Programs at 61%
Plans That Offer a Formalized, Needs-Driven Financial Wellness Program, Separate from the DC Education Program
Types of Financial Wellness Programs Vary
of plan sponsors rely on advisors/consultants to provide and objective check on the advice they get from other service providers
Plan Sponsors value most about the relationship with their current advisor/consultant
AB' defined contribution team conducted a web-based survey of over 1,000 plan sponsors in its latest biennial research study. The survey's respondents had roughly equal representation from all plan sizes across the full universe of DC plans, but we purposefully skewed the concentration of plans in this survey to the large/institutional size plan category.
Here is a breakdown of respondents by plan size:
The goal was to understand how plan sponsors feel about the current state of their companies' plans, their participants and the DC industry. This includes the key findings from our survey. It comprehensively updates the research we last conducted in 2014.
"Target date" in a fund's name refers to the approximate year when a plan participant expects to retire and begin withdrawing from his or her account. Target-date funds gradually adjust their asset allocation, lowering risk as a participant nears retirement. Investments in target-date funds are not guaranteed against loss of principal at any time and account values can be more or less than the original amount invested—including at the time of the fund's target date. Also, investing in target-date funds does not guarantee sufficient income in retirement.
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