How Do Employers Feel About Worker Financial Wellness?

401k participant outcomes, 401k financial wellness, retirement

More responsibility for successful participant outcomes.

401k plan sponsors feel a growing sense of responsibility for participants’ financial wellness, “and are more intent than ever on enhancing their plans to improve retirement outcomes for their participants.”

It’s the good news to come from a new data released by J.P. Morgan Asset Management, signaling an uptick in awareness of the importance of financial wellness, as least with plan sponsors.

“Plan sponsors and their organizations are transitioning from a traditional view of their DC plans—for example, as a way to attract and retain employees—to a sharper focus on achieving the ultimate retirement outcome: helping as many employees as possible reach a financially secure retirement,” Catherine Peterson, Managing Director, Global Head of Insights Programs, said in a statement.

Key themes and findings:

Focusing on retirement outcomes

The research indicates that plan sponsors’ sharper focus on participants’ retirement outcomes begins with the growing sense of responsibility they feel for their employees’ financial well-being and carries over to:

Linking goals and philosophy to action

Plan sponsors are also linking their sense of responsibility, goals and proactive placement philosophy to actions. The survey examines what plan sponsors are doing to strengthen their plans:

 No time for complacency

The above-mentioned progress notwithstanding, savings rates are still too low and some plan sponsors are not confident that their participants have an appropriate asset allocation.

While the percentages of plans implementing and/or considering automatic plan features and strategies are encouraging, too many plans have not yet taken advantage of the potential for these tools to help:

The report identifies factors that may be impeding DC plan evolution. More important, it points to opportunities to address misperceptions, shrink information gaps and enhance understanding of the features and strategies available to help plan sponsors continue strengthening their plans.

Fiduciary misperceptions

Under ERISA, fiduciaries have the obligation to prudently select and monitor a plan’s investments. While all plan decision-makers surveyed define their responsibilities as ones that would categorize them as fiduciaries, 43 percent of these plan sponsors are not aware that they are plan fiduciaries—a disappointing finding, unchanged from our 2015 results.

“Our survey suggests that some DC plan sponsors, to varying degrees, lack clarity regarding their fiduciary status and the nature of their responsibilities,” added Meghan Jacobson, Executive Director of J.P. Morgan Asset Management.

Implications

Seizing these opportunities to help ensure the continued evolution of DC plans is a necessity and will require a collaborative effort:

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