See How They Save
What motivates participant decisions?
Plan sponsors’ intent when creating a defined contribution (DC) plan is to provide a vehicle that will help participants accumulate savings for their future retirement. During a participant’s career, he will likely encounter many plans, guided by a variety of employers, advisers and service providers, all who are working toward a similar goal—but it is the participant who ultimately determines his own retirement success.
To gain insight into the drivers behind participant retirement plan decisions, the PLANSPONSOR Participant Survey, now in its fifth year, delves into participant behaviors and preferences to see how attitudes have evolved. Plan sponsors received a few affirmations in the results: Defined contribution (DC) plans continue to be viewed as a major benefit. Fifty-nine percent of respondents would rather work for a company that has a DC plan but pays 10% less than for a company that does not have a DC plan but pays 10% more.
Participants process information differently. When asked how they want to learn about saving for retirement and were given five possible channels, not one of the five was selected more than 30% of the time, and even the lowest scoring option was selected by one in eight people. Plan sponsors should not assume that any one strategy will work for everyone; rather, multiple strategies work.
This year, more respondents reported living “day to day” and said they do not participate or would not participate in a retirement plan because they are not comfortable investing in the stock market or because they are paying down debt—perhaps a confirmation of the industry movement toward more financial wellness programming. Not surprisingly, respondents were clear as to the important role their employer plays when it comes to their saving for retirement and obtaining health insurance.