Learning from the DC Participant Experience

November 20, 2012 ( – A Cogent Research study provides insight into what DC plan participants want from their plans and plan providers.

By Rebecca Moore | November 20, 2012
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Half (51%) of study respondents have access to an adviser through their defined contribution (DC) plan, 19% do not and 30% do not know if they have access to an adviser. Among those with access, the most preferred method by every age group to work with the adviser is in person, but this is especially true for the oldest and youngest participants. Forty percent of the Silent Generation (born 1925 to 1942) want in-person meetings with advisers compared with 48% of Gen Y.  

When presenting the study findings during a Web event, Marie Rice, practice director of custom research at Cogent Research, said the findings about DC participants’ reaction to match contributions surprised her. When the match is 4% or less, participants tend to contribute a higher rate than match; the deferral rate equalizes to the match at 5% to 6%. However, when the match is 7% or higher, participants again defer more. Rice noted that this is something employers should consider when creating a match formula.  

Regardless of the size of their employers, two-thirds of participants say employers should offer automatic deferral increase and automatic rebalancing features in their DC plans. So, if employers are feeling hesitant about implementing automatic features, employees would welcome them, Rice said.  

Another “aha” moment for Rice occurred when she asked about sources of retirement income, the study respondents pointed to their DC plan, employment income and Social Security. Rice said this made her realize the definition of retirement is changing; the three-legged stool of retirement income used to be a pension, Social Security and personal savings. But, pensions and personal savings are not legs of the stool anymore, and Social Security is ranked last of the three.