Most retirement plan participants would like savings and investing guidance, a survey finds.
Tag: automatic enrollment
Preparing participants financially to be able to retire beat out reducing plan costs as plan sponsors' top concern in this year's Fidelity Investments Plan Sponsor Attitudes Study.
While automatic enrollment generates positive effects, a report argues how these results are counterweighed by pre-retirement withdrawals.
In conclusion, IZA says, “the data do not support the idea that presenting optional 401(k) plan information in a simpler, more compact way will improve employees’ retirement planning choices. However, we did find that financial literacy was positively associated with better choices."
They are on track to replace 75% of their income, compared to 64% for Americans overall.
“We continue to see the significant impact plan design and financial wellness programs have on participant behavior, as evidenced by the increase in both participation and deferral rates and decrease in loan usage,” says Aimee DeCamillo, head of T. Rowe Price Retirement Plan Services.
When constructing their own retirement portfolio, about 10% of participants still hold extreme allocations—either 0% or 100% equities.
Those who are contributing less than 3% to a retirement plan are on track to replace 59% of their income in retirement, whereas those who contribute 10% or more are on track to replace 128% of their income, an analysis from Empower found.
DC plan consultants surveyed by PIMCO offer suggestions for helping retirees with income, core investment menu design and other DC plan features.
Peg Knox, chief operating officer of DCIIA, points to both the coverage gap and retirement income adequacy as being top of mind; there is also a strong fee litigation focus, given how near and dear this topic is to both plan sponsors and service providers.
The state of South Dakota has experienced good results since implementing automatic enrollment and automatic deferral escalation in its 457(b) plan.
Employer contributions and loans are also prevalent, a Brightscope/ICI report says.
Defaults have a powerful effect on retirement savings behavior, according to the TIAA Institute.
With concerns about retirement readiness growing, sponsors are turning to automatic features, increasing their contributions, streamlining their investment menus and improving fee transparency.
In 2016, 40.2% of plan sponsors surveyed by the PSCA used a default rate for auto enrollment greater than 6%.
Empower’s PlanVisualizer aims to create a holistic view of a client’s retirement plan in its current state, along with the ability to model how changes to key design elements can potentially affect participant preparedness.
All employees would have 6% of their income contributed to a workplace retirement plan and have these contributions automatically escalated each year.
Perhaps since the first five years of their working lives is the time period respondents to an American Century survey have the most regret about saving for retirement, they find automatic retirement plan features important.
Among plans with both automatic enrollment and escalation, 70% have participants saving 10% of more.