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We surveyed nearly 800 DC decision makers across market segments, HR professionals,
Treasury, C Suite level executives. We wanted to better understand where plans are today,
where they're headed and really establish a benchmark from which we can measure the
evolution of plan design over time. Plan sponsors are absolutely committed to
raising the bar and really have an appreciation for the importance of their DC plans and driving
retirement outcomes. Seventy-seven percent of them say that it is an important goal to
help their participants retire more financially secure. A large percentage--actually the majority--wants
to create an impression of caring through their program and wants to insure they are
retaining the highest-quality employees in their companies.
It's interesting that plan sponsors' measures of success don't always appear to be calibrated
with the goals and objectives that they are setting for their plan. The two more frequently
used metrics of success are participant satisfaction with the plan and investment performance.
Only 44% of plan sponsors measure success based on the percentage of participants that
will be on track to receive 80% of their final pay at the point at which they retire. We
think this is a really important metric: understanding what the potential is for participant outcomes
and being able to put that into numerical terms is a really, really important and powerful
way to evaluate the success of plan design and a program overall.
Through the plan sponsor research, we found that the majority of sponsors saw communications
being a promotional tool--in which they communicate the significant benefit that the plan offers.
Much further down on their priority list, sponsors saw the use of communications to
communicate and educate participants on their retirement income gap. We see that as a critical
need that participants ultimately need to know if they're on track for retirement.
There are several innovations that plan sponsors should consider. Auto-enrollment, auto-escalation
and a full plan re-enrollment, defaulting to the target date fund as a QDIA. We think
all of those could have a major impact on participant outcomes.
When you look at how plan sponsors have adopted these innovations, it's somewhat of a mixed
story. While 46% of plan sponsors use target date funds, much fewer are using those features
of auto-enrollment and auto-escalation. And only seven percent of plan sponsors have done
a re-enrollment to target date funds. The other thing to consider here is that the
larger plans that we've noticed in the survey are much more willing to adopt these strategies
and that's a positive sign. Hopefully, these innovations will move down-market overtime.