The June study among 4,805 participants found 31% indicated 401(k), 403(b) and 457 plans will be a top source of income in retirement; only 10% said they will depend on Social Security. “This highlights how integral DC plans are to future financial planning,” Ellie Bond, product director in the syndicated division at Cogent and lead author of the study, said during a press briefing. “It shows participants are becoming more self-reliant.”
Nearly two-thirds (63%) of participants surveyed have not taken proactive steps to calculate what their income will be in retirement, but they do follow up with their plans to save, Bond noted. In 2012, nearly one-quarter (23%) of those polled planned to increase their contributions to their DC plans, and 27% did so in the last year. Another 27% say they intend to increase contributions in the next 12 months.
On average participants defer 7.3% in DC plans; those who are auto-enrolled defer 7.6%, the study found. More than one-fifth of plans are using automatic deferral escalation, and 28% indicate strong interest in this feature.
The study results also showed participants’ average satisfaction with plan providers is lackluster (54%), but there is disparity of satisfaction among income levels and age. Bond said satisfaction seems to be linked to contact frequency and the length of the participant’s experience with the plan provider. Participants expressed highest satisfaction with their account statements (68%).
Three-quarters of participants show interest in cross sell outreach. In particular, participants most want information about investing. They are also likely to seek information about 529 college savings plans and brokerage accounts. “This shows they want a wider range of information,” Bond said.
The DC Participant Planscape report provides an in-depth look at the DC participant experience. It benchmarks the top plan providers using critical participant satisfaction measures, and examines the attitudes and perceptions that inform and define participant behavior. The study explores how to maximize participant contribution and engagement levels, leverage cross-sell opportunities and access rollover dollars.
More information, including how to purchase the study report, is here.