Greater awareness of retirement and financial concepts and a better perception of employer generosity are some of the value employees get from defined contribution (DC) plans, according to PLANSPONSOR’s 2016 Participant Survey.
The survey found respondents who work for organizations that offer DC plans were twice as likely to have established retirement goals as employees without access (30.8% vs. 15.3%). The percentage of participants who “don’t know” how much income they need to replace in retirement dropped by more than 40% (from 43.2% to 24.5%) when respondents had access to a DC plan.
Further, employees without access to DC plans were almost twice as likely to wish their employer offered more financial education at work (66.7% vs. 39%).The percentage of respondents with more than $250,000 in retirement savings was nearly double for those with a DC plan than for those without (22.9% vs. 12.6%). On the other hand, 60.1% of those without a DC plan reported their retirement savings was less than $50,000, compared to 36.9% of those with a DC plan.
Defined contribution plans also improve employee perceptions as to the generosity of benefits offerings. Employers offering the plans were more than twice as likely (39% vs. 17.5%) to have their benefits described as “generous” or “very generous” as companies that did not offer a retirement plan.
Employers unconvinced of their value might consider this more direct finding: 58.9% of respondents without access to a DC plan say they are at least “somewhat likely” to participate in such a plan if one was offered.
In March, PLANSPONSOR surveyed 1,035 employed adults ages 23 and older regarding their access to and usage of defined contribution plans. More results from the 2016 Participant Survey can be found here.