A new Transamerica survey predicts massive growth in defined contribution (DC) retirement plan coverage, and particularly in the small plans market.
The report, “Transamerica Prescience 2026,” is the first in its series and summarizes trends in employee financial wellbeing. Experts represent trade groups, research organizations, consulting firms, academic institutions, advisory firms, investment management firms, service providers, and trade media.
According to the report, most experts expect 88% of employers with less than 100 workers to offer a DC plan by year-end 2026. This is up from 46% of small plan employers in 2022.
Transamerica links the anticipated increased coverage to state mandates. As of June 2022, 16 states and two cities have mandated retirement plan coverage for at least some employers, with many mandating coverage for employers with as few as five employees, states the report.
Growth in traditional and emerging benefits
In addition to retirement plan coverage, Transamerica expects more employers to offer a range of traditional and emerging financial wellbeing benefits by 2026. The study predicts nearly 7 in 10 employers will offer health savings accounts (HSAs), 13% will offer retiree medical coverage and 17% will offer executive healthcare coverage.
Emerging benefits, such as mortgage or rent assistance, credit improvement programs, student loan repayment, and emergency savings funds are projected to be offered by 40% to 60% of employers by the end of 2026, according to the report. As the growth of remote work flexibility continues, Transamerica experts over a third (38%) of employers to offer the benefit in the next three years.
Transamerica connects the anticipated growth to recruitment and the steady competition for employee talent, as experts say the workforce continues to experience a talent shortage. According to the study, 81% of experts agree that attracting and retaining top talent will be just as challenging as in 2022.
As more employees demand for additional traditional and emerging benefits, experts anticipate employers to listen to their workers’ needs. Eighty-six percent of experts in the study said helping employees enhance their financial wellbeing will be a priority, and 72% anticipate most employers will rely on a total rewards approach to employee compensation in 2026, including retirement, healthcare, work hours, and more.
Additional findings can be found here.
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