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According to the study, retirees and pre-retirees that are in contact with their plan provider are twice as likely to keep their retirement plan assets with that provider when changing employers or reaching retirement. The study found that “active” contact methods (e.g., phone, in-person contact) that allow for personal two-way communication are more effective than “passive” methods such as postal mail or e-mail. While initial retention is important to plan providers, it doesn’t eliminate the risk of participants deciding to roll over their balances at any time. In fact, the study found that half of stay-in-plan participants were not committed to remaining in the plan and nearly 20% said they had not considered their alternatives yet. Furthermore, only 24% of retirees and 15% of pre-retirees who cashed or rolled their money out of the plan invested the money with that same plan provider. The study found, mutual funds are the most commonly selected destination for rollover assets, especially among higher-balance participants. There are other factors that can play into whether a participant remains in their plan. According to the study findings, retirees and pre-retirees who have contributed to their DC plans for 20 years or more are significantly more likely than others to leave the money in the plan and remain committed to doing so. Most of these long-tenured individuals have stronger relationships with both the employer and plan provider. Former employees of education, non-profit and public-sector employers are significantly more likely than former employees of private-sector employers to leave their money in the plan. For example, among public sector workers, 50% of assets were retained in plan and committed as compared to private sector workers at small companies (under 100 employees), where only 14% of assets were retained and committed. Among former private-sector workers, in-plan retention improves with increased employer size.
According to the study, retirees and pre-retirees that are in contact with their plan provider are twice as likely to keep their retirement plan assets with that provider when changing employers or reaching retirement.
The study found that “active” contact methods (e.g., phone, in-person contact) that allow for personal two-way communication are more effective than “passive” methods such as postal mail or e-mail.
While initial retention is important to plan providers, it doesn’t eliminate the risk of participants deciding to roll over their balances at any time. In fact, the study found that half of stay-in-plan participants were not committed to remaining in the plan and nearly 20% said they had not considered their alternatives yet. Furthermore, only 24% of retirees and 15% of pre-retirees who cashed or rolled their money out of the plan invested the money with that same plan provider. The study found, mutual funds are the most commonly selected destination for rollover assets, especially among higher-balance participants.
There are other factors that can play into whether a participant remains in their plan. According to the study findings, retirees and pre-retirees who have contributed to their DC plans for 20 years or more are significantly more likely than others to leave the money in the plan and remain committed to doing so. Most of these long-tenured individuals have stronger relationships with both the employer and plan provider.
Former employees of education, non-profit and public-sector employers are significantly more likely than former employees of private-sector employers to leave their money in the plan. For example, among public sector workers, 50% of assets were retained in plan and committed as compared to private sector workers at small companies (under 100 employees), where only 14% of assets were retained and committed. Among former private-sector workers, in-plan retention improves with increased employer size.
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