New research provides a far-from-shocking confirmation that plan participants, providers and sponsors don’t see eye-to-eye when it comes to 401ks.
A Cerulli Associates survey examined several areas where there is an assumed consensus about issues related to 401k plans. Yet data collected implies everything but. In reality, widely differing views exist among plan stakeholders.
“Plan sponsors and recordkeepers might not be on the same page in thinking about topics related to improving the quality of the investment lineup, minimizing fiduciary risk/avoiding litigation, and reducing plan administration costs,” Jessica Sclafani, director at Cerulli, said in a statement.
Specifically, the survey shows 27 percent of plan sponsors would like to make improving their investment lineup a top priority this year, while only four percent of recordkeepers were under the impression that this was plan sponsors’ line of thinking. Thirty-six percent of recordkeepers said that minimizing fiduciary risk and avoid litigation was a top concern; only 16 percent of plan sponsors responded similarly.
There’s apparent confusion between 401k plan sponsors and plan participants, as well. Around 44 percent of sponsors say employee participants are in the driver’s seat when it comes to retirement savings and investment decisions. But 77 percent of employees feel they are solely responsible for making these decisions.
“While data shows that participants understand their obligation for funding their own retirement, this can be an overwhelming prospect, and does not always translate into healthy savings behavior,” the Cerulli report points out. “Financial wellness programs that can position saving for retirement alongside competing financial responsibilities (e.g., rent/mortgage payments, credit card debt, student loan debt) can be helpful tools in spurring participants to act and take ownership of their retirement savings.”
About this, plan sponsors and recordkeepers agree. The survey shows both parties think improving employees’ financial wellness should be a top priority.
“This data reflects the overall DC industry’s focus on financial wellness, which, despite being an ill-defined and amorphous topic, continues to be top-of- mind for both plan sponsors and plan providers,” the report said.