Plan Sponsors Interested in Some New Plan Design Ideas
Respondents to a Principal survey also shared what they believe has contributed to plan and participant success.
Forty-six percent of plan sponsors agree, and 24% strongly agree, that their organizations offer benefits to help employees get to retirement, according to Principal’s “Retirement Security Survey.”
Very few plan sponsors indicated they are considering offering new plan features that have been adopted by others, such as in-plan Roth conversions (only 15% considering), retiree-friendly distribution features (18%) or managed accounts (11%). However, there were some new plan design ideas in which plan sponsors showed more interest.
More than three in 10 indicated they were interested in enrolling a participant into an individual retirement account (IRA) once he has reached the IRS deferral limit (32%) and automatically enrolling Generation Z employees into financial literacy education (31%). More than two out of 10 (21%) survey respondents said they are interested in automatically enrolling participants into a managed account default investment.
Other new plan design ideas plan sponsors are interested in, although less so, include:
- Auto-enrollment into an emergency savings account if a participant requests a loan from their retirement account (17% are interested);
- Semi-annual re-enrollment of employees that have opted out of the retirement plan (17%);
- Auto-enrollment into a Roth account in the retirement plan (14%);
- Auto-enrollment into an emergency savings fund to a balance of $1,000 before participants can contribute to the retirement plan (9%); and
- Auto-enrollment into an in-plan guaranteed income investment (7%).
In other findings, nearly six in 10 plan sponsors (58%) reported that automated features have had a positive impact on their plan success.
Respondents also ranked offering an employer match as the most effective strategy for increasing participants’ savings rates, selected by 72%. Offering on-on-one retirement and financial wellness meetings was a distant second, chosen by 35% of respondents, and 30% selected “promoting retirement plans during benefit enrollment season at our company.”
More information about the survey can be found here.