Employers are more worried about whether their retirement plan is effectively preparing employees for retirement. It’s a distinct change from 2017, when the focus was on reducing business costs related to the plan, according to Fidelity Investments’ annual plan sponsor attitudes study.
It surveyed employers that use a wide variety of recordkeepers and have at least 25 participants and $10 million in plan assets.
Fidelity found that more plans than ever (92 percent) use plan advisors, and the number of plan sponsors actively looking to switch their plan advisors (22 percent this year), while historically high, is down considerably from an all-time high of 38 percent last year.
While last year’s potential regulatory changes were top of mind for plan sponsors, this year, the top reason they hired advisors was to help improve their plans.
Given plan sponsors’ focus on retirement readiness, the Boston investment behemoth notes that plan advisors can add value by sharing knowledge and opportunities to help plan participants reach their goals in retirement:
- Auto-enrollment, which ranked as the top plan design change last year at 42 percent, fell to 26 percent. With only about half of plans using auto-enrollment (51 percent), plan sponsors could be missing opportunities to encourage employees to save more.
- Unfortunately, six in 10 finance and HR associates participating in the survey reported concern that employees would not respond well to being automatically enrolled. However, 87 percent of employees stayed in plans with an auto-enrollment default of 5 percent or higher, and 68 percent reported being “very satisfied” with the feature.
- Retirement income goals are on the minds of plan sponsors – seven in 10 reported setting a goal for retirement income
- Health Savings Accounts (HSAs) could increase firms’ resources available to retirement plan participants. Sixty-five percent of plan sponsors stated that retirement plans compete for funding with health and other benefits. Sponsors considered health care to be the most important benefit for the company–even before retirement benefits.