When sponsors were asked, “How responsible should each of the following parties be for helping your employees prepare financially for retirement?” 116 out of 119 (97.5%) said the employee is “very responsible.” When participants were asked the same question, 923 out of 1000 respondents (92.3%) said they personally felt “very responsible.”
The party with the next-level of responsibility is the employer. Twenty-five percent of plan sponsors said they are “very responsible” for their employees’ retirement security, and 62% said they are “somewhat responsible.” Eighteen percent of participants said their employer is “very responsible,” and 53.3% said the employer is “somewhat responsible.”
The fork in the road
BlackRock’s survey data found that employers and employees are mostly on the same page during the accumulation phase; the employer offers support and guidance, which the employee appreciates, and they agree that it’s up to the employee to build a secure retirement. It’s at the point of retirement and beyond where the expectations diverge.
Forty percent of employees want “a great deal more” information on how to generate a secure income in retirement; 36% want a great deal more information on how to make sure their money lasts through retirement; and 36% also want more information on how to invest their money safely in retirement.
However, only 25% of employers want to deliver “a great deal more” information on how to generate secure income, 22% want to provide more information on how to make sure money lasts through retirement, and 21% want to educate on how to invest wisely in retirement.
BlackRock says this divergence is of critical importance as 35 million Baby Boomers are nearing retirement. A vast majority of employee respondents – 93.6% – favor having an income solution in their DC plan; only 6.4% would be satisfied with just having a lump sum option.
Perhaps the clearest numerical sign of a “responsibility gap” is that 94% of employers feel that helping employees prepare for retirement is an important goal. Yet only 13% feel helping employees secure an income stream in retirement is equally important.
Partnering with The Boston Research Group, 1,000 participants in a variety of DC plans, including 401(k), 403(b), profit sharing, and stock purchase plans, were surveyed. Separately, 119 plan sponsors were surveyed as well; they included decision-making executives, 60% of which have more than $1 billion in participant assets. Combined, the plan sponsors represent $525 billion in plan assets and 4.1 million participants.