While the passage of SECURE 2.0 was largely celebrated and commemorated by the retirement industry, new data from Alight finds plan sponsors were generally aloof on the news.
The “2023 Hot Topics in Retirement and Financial Wellbeing,” found zero of the 90 employers it surveyed were interested in joining a pooled employer plan (PEP), and only 3% expressed a high interest in adding annuities to their defined contribution (DC) plan once available. Thirty-five percent of employers said they were moderately interested in annuities, while 12% disclosed already having annuities in their plans. Over half (57%) said they were not interested at all in the features.
All employers surveyed also said the lifetime income disclosures have not swayed their opinion in offering in-plan lifetime income.
While provisions in the SECURE Act were designed to provide clarity and relieve employers over some of the fiduciary concerns, nearly half of employers surveyed said these anxieties were the main reason for not offering annuities. Others noted wanting to see the market evolve more (44%), difficulty with participant communication (44%), operational or administrative concerns (38%), participant utilization concerns (32%), an uninterest in making plan enhancements for terminated participants (21%), preference for participants leaving the plan at termination (18%), or cost barriers (15%).
Directing their attention elsewhere
Instead, plan sponsors are directing their attention to other solutions aimed at improving retirement planning and savings for participants. A third of employers surveyed said addressing broad financial wellbeing is a top priority for 2023, while another 29% are focusing on recognizing retirement readiness, such as helping participants understand their retirement savings needs and establishing plans.
Others (14%) are encouraging higher contribution rates, 10% are wanting to increase participation, 6% are addressing long-term savings opportunities, and 3% are minimizing leakage.
In a separate question on what they’re likely to address in 2023, almost half (47%) said they want to create or focus on the financial wellbeing of employees, and 38% indicated expanding inclusion and diversity efforts in retirement and financial wellbeing plans—even if the report found only few were taking effective action in doing so. Just under 10% of employers have changed their plan provisions to expand participation and savings opportunities, and only 6% released data on recruitment and/or promotion rates of under-represented groups, among the findings.
Keeping inflation in mind
The Alight research found that record-high inflation numbers in 2022 prompted employers to act in providing additional benefits to employees. Fifty-five percent offered access to advisors who can provide guidance on investing, while 29% added an inflation-specific investment, such as TIPS, in the plan. Twenty-five percent provided access to tools that model different inflation scenarios, and 13% communicated ways to invest in a high inflation environment.
More findings on the study can be found here.
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