This is because new technologies, along with improved plan design and products, will drive personalized retirement planning and focus on participant goals and outcomes suited to the mobile, data-driven worker, according to a survey from Transamerica Retirement Solutions. “Prescience 2017: Expert Opinions on the Future of Retirement Plans,” was designed to present executives responsible for retirement plan management with insights about the industry’s future, so they can develop and evaluate their organizations’ plans and strategies.
In response to the demand for tools and resources customized to an individual’s retirement readiness, experts predict that by 2017, 59% of all retirement plan providers will offer participants a personalized report that tells them how much to save for a fully funded retirement. The survey also finds 39% will have gone as far as to change plan design to enhance the retirement readiness of participants.
“We have to get America’s work force on a clear course towards retirement readiness,” says Stig Nybo, president of pension sales and distribution, Transamerica Retirement Solutions, based in Harrison, New York. “The challenge is that, for many people, retirement timing and feasibility are viewed as being outside their control. Also, challenges with the economy and the employment rate, along with the higher eligibility age for full Social Security benefits, mean more Americans may be forced to work longer, unless they are able to put a personal retirement savings strategy in place and act on it.”
The findings of the survey are encouraging, says Nybo. “Industry experts expect that the demand from participants to understand their retirement forecast will combine with advances in technology to allow for increased personalization. Retirement plan sponsors and advisers can expect to see a rise in innovative tools that participants need for greater control over their retirement planning.”
While keeping participants informed will be important, it is just the first step towards enhancing participant retirement readiness. According to the survey, the retirement readiness trend will increase the share of plan sponsors who automatically enroll employees to more than 55% from 42%. Plan sponsors who automatically enroll participants at a deferral rate of 6% of pay or better will grow to 45% from 29%.
Engagement via Mobile Technology
The survey results also show that the next five years will see the retirement industry keep pace with advances in mobile technology. A greater use of smartphone technology will further improve the participant experience. Experts predict all providers will offer websites optimized for mobile operating systems and nearly all retirement plan providers will offer mobile apps with functionality beyond those currently available. Such enhanced technology will give plan sponsors the means to prompt participants to act, such as to correcting the course of their plans in real time or responding to specific point-and-click response mechanisms regarding their plan contributions or investments.
Adoption of mobile technology is also predicted to facilitate simpler, faster and more frequent participant communication that will prove more effective at increasing engagement. Experts predict more than three in four providers will offer mobile games as entertaining learning paths for retirement planning.
Nybo told PLANSPONSOR, “Retirement plan providers are increasingly focused on retirement outcomes for their participants. That means that sponsors and providers will be challenged to reach out to participants via the easiest access points from the participant’s standpoint. In today’s world, that means mobile technology, whether it’s mobile phones, apps, or social media. We expect that plan providers will offer more tools to help sponsors determine their employees’ retirement readiness.”
Nybo added, “Participant needs are an important part of any plan sponsor’s assessment of their plan’s effectiveness at helping employees to retire comfortably. Sponsors will want to empower their employees with access to tools that give participants more control over their retirement planning. Plan providers that do not provide these tools will certainly be at a disadvantage.”
The survey was conducted in the second quarter of 2013 and examines trends in retirement plans with $25 million to $1 billion in assets. Fifty-five retirement plan experts from 45 organizations across the nation answered the 85-question survey. Trends examined by the survey include regulations, technology, investments, plan design, participant education and communication, for the corporate, nonprofit health care, higher education and the Taft-Hartley market.
A copy of the survey can be requested by emailing firstname.lastname@example.org.