The survey showed that retirement income solutions continue to be a key area of focus
Defined contribution (DC) plan sponsors have been increasing their efforts when it comes to retirement security for their participants, a study by JP Morgan Asset Management found, as reported by Benzinga.
The investment management firm recently released a report drawing on a decade worth of data that tracked the evolution of views and actions by DC plan sponsors.
"Our enhanced 2023 Plan Sponsor survey highlights the industry shift as plan sponsors begin to recognize the interconnection of overall employee financial and personal wellness,” said Alexandra Nobile, vice president, retirement insights at J.P. Morgan Asset Management.
Employee financial wellness
The findings showed that 85% of plan sponsors feel that they have a strong sense of responsibility for the financial wellness of their participants. This was an increase from 59% in 2013. 95% of them believed that their efforts are ensuring the financially secure retirement of their participants.
7 out of 10 respondents said that they offered life insurance for employees while 6 out of 10 provided disability insurance and mental health benefits. Half of the respondents made sure that health savings accounts (HSAs) were available to their participants while under half gave paid leaves for parental or caregiving affairs.
There were also a quarter of the respondents that offered student loan debt assistance while 40% provided emergency savings benefits, one-on-one financial coaching as well as debt management assistance.
Growing interest in automation and customization
61% of the respondents said that they took a proactive plan design approach with most of them believing that their plans are extremely or very effective. 43% of the sponsors said that they now offer plans that have an automatic contribution escalation feature which was also a jump from the 21% in 2013.
However, 47% also still actively choose not to provide automatic enrollment in their plans and 51% do not offer automatic contribution escalation at all.
Retained high use of Target Date Fund (TDF)
Only 4 in 10 plan sponsors do not offer a TDF in their DC plan. 45% of the most frequently reported changes in investment menus were to add an option designed to generate income for retirees. 35% was to reduce the number of investment options.
3 out of 4 respondents said that they were quite confident in their participants having an appropriate asset allocation. 85% were proactive sponsors while 59% were sponsors that had a philosophy that was participant driven.
Retirement income
6 out of 10 surveyed sponsors said that DC plans should be utilized for the purpose of generating retirement income.
9 out of 10 respondents agreed that it is important to offer investments which can help participants generate income in their retirement. Even for those whose plans are still to have a retirement income option, 45% of them said that they were likely to consider starting to offer one in the coming year.
"Our research shows that DC plans have become the primary retirement savings vehicle for most working Americans,” said Catherine Peterson, global head of insights and product marketing at J.P. Morgan Asset & Wealth Management.
“We expect to see more plan sponsors taking a proactive approach to evolving their retirement benefit offering through innovative DC plan design," Nobile said.
