A press release said three-quarters of survey respondents reported they now have a plan adviser. In addition, 21% of plan sponsors consolidated the number of vendors used in their 403(b) plans and 20% converted to a single vendor arrangement.
More plan sponsors are outsourcing the administration of plan loans (53%), hardship withdrawals (45%) and QDROs (42%). More than one-third (37%) said that implementing a new fiduciary process associated with the new 403(b) regulations was their primary challenge.
The survey found health care plan sponsors maintain multiple defined contribution plans. Seventy-seven percent of survey respondents offer a 403(b) plan – the most prevalent DC plan offered; 62% offer a 457(b) plan; and 41% offer a 401(k) plan. Eleven percent of respondents currently offer a Roth 403(b) plan – a three percentage point increase from last year, the number of plan sponsors offering a 401(a) plan increased to 31% from 25% in 2008.
Despite the economic challenges of the past year, and organizations’ efforts to cut costs, plan sponsors eliminating (4%) or reducing (8%) the employer contribution to their defined contribution plans are in the minority, according to the press release. Contribution rates among participants experienced only a modest decline in the last year, and the survey found a one percentage point decrease in the salary deferral rate among highly compensated employees since last year.
There was only a modest decline in participation rates across all defined contribution plans – 68% now versus 70% a year ago. Only 7% of participants have outstanding loans, and outstanding loan balances decreased for the second consecutive year. The median loan balance is $3,834 among survey participants.
The survey found the vast majority (86%) of health care organization retirement plan sponsors make employer contributions to their defined contribution plans, with matching contributions being the most prevalent method (71%). While the adoption of automatic services did not change dramatically over the course of the last year, automatic enrollment increased only two percentage points to 31% this year; the use of automatic deferral escalation remained flat at 16%, according to the press release.
Across all plan types, 82% of plan sponsors permit participants to take loans from their account, a 7% increase from 2008.
Improving employee education remained a top priority for 72% of plan sponsors.
Cost cutting measures by health care organizations included freezing or terminating defined benefit plans. In 2009, the number of plan sponsors that offer a defined benefit plan is 39%, compared with 51% in 2008. Another 13% said they expect to freeze their defined benefit plan.
A total of 246 healthcare plan sponsors nationwide responded to the survey during the second quarter of 2009. To request a copy of the survey report, "Retirement Plan Trends in Today's Healthcare Market - 2009" visit www.aha-solutions.org or call 800-242-4677.