A new report by Nuveen highlights the latest retirement-focused insights in the defined contribution (DC) space, including longevity literacy, ESG, and new provisions offered in SECURE 2.0.
According to the research, “The Future of Defined Contribution,” which fielded responses from 1,003 investors, one-in-three men and one-in-two women who are currently in their mid-50s can expect to live to at least 90 years old.
The study found that over half of U.S. adults in a DC plan either do not know or underestimate how long people tend to live in retirement, while 37% indicated having a strong knowledge. Women tended to have better longevity than men—they were more likely to know life expectancy at age 60 and less likely to underestimate it compared to males (19% compared to 31%).
ESG offers clarity but not certainty
Nuveen’s study also explained five key elements of the Department of Labor’s (DOL) ruling on environmental, social, and governance (ESG) factors, including the duty of prudence, duty of loyalty, proxy voting, qualified default investment alternatives (QDIAs), and tie-breaker tests.
The research notes that while the DOL remained largely neutral on ESG factors, it’s likely employers will have remaining questions on offering the investments in their retirement plan menus. This is even likelier due to the backlash the rule has received from Republican lawmakers, and recently, Congress. Due to this, the research notes that many states have since left ESG in a “flux,” as party control can swing the rule in either direction.
Yet, despite the scrutiny, the research found strong support for responsible investing from DC participants. Seventy-five percent of workers believe that employers who offer responsible investments care about their retirement outcome, with 33% of these workers strongly agreeing with this sentiment and 42% somewhat agreeing. Ninety-five percent of Millennial and Gen Z employees strongly agreed with this.
Not only did employees support responsible investing, but the study also found these workers were likelier to stay with employers who offers ESG factors. Sixty-nine percent said that having responsible investing options makes them feel good about working for their employer, and 60% said it would make them more loyal to their employer.
Top four provisions in SECURE 2.0
Nuveen’s study also listed and examined its top four provisions of SECURE 2.0, including automatic enrollment and auto-escalation.
“We have long advocated for autoenrollment to ensure that employees are contributing early and consistently to their retirement plans,” Nuveen said in its study. “Autoenrollment is a great way to ensure that employees are signed up for retirement benefits and gaining the benefit of eligible company matching.”
The study’s other highlights included student loan matching contributions, multiple employer plans (MEPs) and pooled employer plans (PEPs), and changes to emergency savings and hardship withdrawals.
Other significant provisions listed were 529 rollovers, required minimum distributions (RMDs), catchup limits, and collective investment trusts (CITs) in 403(b) plans.
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