Even as retirement plan income options continue to take shape in the industry, employers’ lackluster stance on the tools has not waned, finds new research today from MFS.
The 2024 MFS DC Plan Sponsor Survey found that while employers have evaluated implementing guaranteed income options to their plans, just 17% say they are “very” or “extremely” likely to incorporate a solution within the next 12 to 18 months, either because they are already “happy with their current plan design,” or due to low participant demand.
Instead, plan sponsors say they are analyzing their investment lineups and considering changes like “reducing or removing options, replacing managers, or adding options to their core menu.” Sixty-nine percent of sponsors currently offer advisory services, while 61% say that all participants are given access to an advisor. Thirty-eight percent say that access to an advisor is provided through a managed account solution.
Others are reviewing SECURE 2.0 legislation and adopting its provisions.
Plan sponsors are choosing to update plan features as more worry about workers’ retirement readiness. MFS’ findings show that employer confidence in participants’ ability to fund a comfortable retirement has diminished to a C+ grade.
Furthermore, only 18% of plan sponsors are “very” or “extremely” confident that their participants will be able to retire at their own accord—down from 23% last year—and 37% list believe savings rates are a concern.
However, these concerns are still much lower than other worries for plan sponsors, including the regulatory and legislative landscape (71%) and litigation risks (49%).
“While it’s clear that plan sponsors are grappling with concerns about retirement readiness, it’s encouraging to see that plan sponsors are reviewing their investment lineup and making advice more readily available,” said Jeri Savage, retirement lead strategist at MFS. “Plan sponsors who focus on these areas tend to be more confident, our survey found.”
Meanwhile, 77% of participants in a recent MFS Global Retirement study remain somewhat, very, or extremely confident that they will be able to retire at the age they prefer.
She added, “Our 2024 MFS Global Retirement Survey indicated that participants have a higher degree of confidence in their ability to achieve their retirement goals than plan sponsors do, reflecting a broader sentiment that these challenges can be overcome with proper attention and planning.”
In its findings, MFS provides recommendations for sponsors wanting to boost their confidence levels, like utilizing automatic features and tailored engagement strategies, and reviewing the plan’s investment lineup.
“The good news is, there are plenty of steps that plan sponsors can take to encourage better engagement and boost retirement confidence,” Savage added. “Plan sponsors understand, though, that any strategy to improve the retirement readiness of participants has to be personalized, customized, and suitable to their plans.”
SEE ALSO:
Q&A with MFS’ Jeri Savage: Plan Sponsor, Participant Surveys Uncover New Opportunities for Advisors
The Road to Better Retirement Outcomes with MFS’ Jeri Savage