Half of nonprofit organizations (50.4%) that sponsor 403(b) retirement plans are equally concerned about all employees saving enough for retirement, no matter their age, according to a survey by the Plan Sponsor Council of America (PSCA).
The next most concerning group is Millennials (18.1%), followed by Generation X (14.4%). However, only 15.8% of survey respondents target their plan education materials to specific age segments.
The survey, sponsored by The Principal Financial Group, found less than one-quarter of nonprofit 403(b) plan sponsors (23.2%) offer a holistic financial wellness program beyond the retirement plan, which could include education about health care, debt management, financial planning and saving for college. But, another 20.3% indicated they plan to add such a program in the future.
Only 10.6% of 403(b) plan sponsors surveyed are monitoring potential participant outcomes by providing their participants with access to modeling and income-stream projections offered through the plan service provider.
“When saving for retirement, it’s important to include a desired outcome or personalized goal within the process,” says Aaron Friedman, national tax-exempt practice leader at The Principal. “It’s encouraging to see some plans are already measuring potential participant outcomes, but we believe it’s something all plans should be doing to help participants know whether they’re on track for a more secure retirement.”
When asked whether they consider automatic enrollment as a way to improve retirement outcomes for participants, 47.9% of respondents answered yes, while 27.9% said no and 24.2% were unsure. More than one-quarter of respondents (27.5%) indicated they have an automatic enrollment feature built into their plan, and another 8.8% said participation in their plan is mandatory.
Slightly more than 27% percent of plan sponsors said they feel they have a responsibility to encourage savings and are taking measures to do so, while another 25.8% acknowledged that same responsibility but said they need to do more to support positive savings behavior. More than one-third of respondents (35%) reported they encourage their employees to save but do not want to “force it,” and only 10.3% said they offer a plan and feel the rest is up to the employee.
“It’s no surprise the majority of not-for-profit organizations recognize the important role they play in helping their employees prepare for retirement,” says Bob Benish, executive director of PSCA. “We continue to see 403(b) plan sponsors make progress in building better retirement programs, and encouragement and education are key factors in helping participants create positive outcomes.”
PSCA’s “Attitudes Towards Retirement Readiness in 403(b) Plans” survey reflects responses from 381 not-for-profit organizations that currently sponsor a 403(b) plan. Full survey results are available here.