401khelpcenter.com Logo

Insights: Trends, Research, and White Papers

To subscribe to our free weekly newsletter, enter your email address below then click the "Join" button.

Email Address:



The Role of the 401k in Today's Tight Labor Market

In his role as managing director and head of retirement plan services at Schwab Retirement Plan Services, Brian Bender spends a lot of time thinking about the interplay of retirement benefits, compensation structures, and employee retention. According to Bender, ongoing cultural shifts have influenced both employees' expectations concerning workplace benefits and the evolving role of the 401k plan in talent management.

Source: Planadviser.com, June 2022

Access to CITs Creates Opportunity for 403b Plans

The topic of making CITs permissible investment vehicles in 403b plans has been covered extensively over the past several years. This 5-page paper focuses the dialogue on what will be the most important innovations and their potential outcomes should 403b plans be allowed to use CITs, namely: potentially lower costs and opportunities for greater administrative efficiency, flexibility for more investment innovation, and more choice in short-term investing options.

Source: Dciia.org, June 2022

401k Plans Are Failing Middle-Class Americans

A new report finds that the tax breaks designed to encourage Americans' retirement savings disproportionately benefit high-income households and do little to assist middle-class families. More than half of the tax breaks for defined-contribution plans, such as 401ks and individual retirement accounts, go to those whose income puts them in the top 10%, according to new research from the National Institute on Retirement Security, a nonprofit, nonpartisan organization established to contribute to informed policymaking.

Source: Investmentnews.com, June 2022

May Sees a Change of Pace in 401k Trading Activity

Following a month when there were no above-normal trading days despite high levels of market volatility, 401k traders seemingly decided to change course in May. According to Alight's May 2022 401k Index, 12 of 21 days in May had above-normal trading activity, but no day exceeded three times the daily average. In comparison, there were 16 above-normal days in the first four months of the year.

Source: Asppa.org, June 2022

Taking 401k Plan Design to the Next Level

In a testament to the willingness of plan sponsors to implement smart plan design, retirement plan participants broke new savings records in 2021, yet there is still more to be done, according to Vanguard's newest edition of How America Saves.

Source: Napa-net.org, June 2022

How Retirement Is Changing as We Live Longer

A new study by Edward Jones and Age Wave, "Longevity and the New Journey of Retirement," examines what it means to experience well-being and thrive in retirement, a journey that is not one-size-fits-all, and instead has many possible paths and variations. The study of more than 11,000 U.S. adults found that despite Americans' worries about health care and long-term care costs in retirement, they still desire to live longer, and nearly seven in 10 Americans (69%) want to live to age 100.

Source: Planadviser.com, June 2022

How Plan Sponsors Feel About Financial Advisers

In its new survey, "The Value of a Financial Advisor," Morgan Stanley examines how plan sponsors feel about financial advisers and how advisers affect employee outcomes. For plan sponsors, having dedicated financial advisers to help with investment oversight brings added peace of mind, a survey says.

Source: Planadviser.com, June 2022

Study Finds Plan Advisors Integral to Retirement Plan Participation and Outcomes

Morgan Stanley released new research from its inaugural workplace retirement study that shows plan sponsors see a positive impact and value in having a plan advisor oversee their workplace retirement plan to boost retirement plan participation and outcomes.

Source: Businesswire.com, May 2022

401k Plans Want More Personalized Retirement Solutions

Personalized solutions reportedly are becoming more attractive for plan sponsors who are encouraging those saving for retirement to remain with their 401k provider after they leave the workforce. That's according to PIMCO's 16th Annual Defined Contribution Consulting Study, which surveyed 36 consultants and advisory firms that serve more than 37,000 clients with $6.9 trillion in total assets in DC plans.

Source: Napa-net.org, May 2022

Why Small Business Owners Often Resist 401ks

At a time when many companies are boosting 401k benefits to attract and retain employees in a tight labor market, 74% of small businesses still do not offer a retirement plan for their employees, according to survey data published by ShareBuilder 401k. According to the survey, many small business owners mistakenly believe their business is simply too small and that 401ks are too costly.

Source: Planadviser.com, May 2022

Alight Data Finds 401k Plan Balances Hit Record Highs

A new report by Alight Solutions found that after a few years of turbulence, retirement savings are on the rise for US employees. Alight's 2022 Universe Benchmarks report revealed that the average defined contribution plan balance hit an all-time high of $144,280 at the end of 2021, up 10% from 2020. Median plan balances also increased, from $28,426 to $29,607, another record high.

Source: Alight.com, May 2022

2022 RCS Fact Sheet: Expectations About Retirement

Many workers continue to say they are behind in their retirement preparations, including saving for retirement. Consequently, what sources of income do workers expect to receive in retirement? How do workers' expectations align with retirees' experiences?

Source: Ebri.org, May 2022

2022 RCS Fact Sheet: Retirement Confidence

One in three Americans feel very confident about their ability to have enough money to live comfortably throughout their retirement years. Workers who say debt is a problem are, not surprisingly, less confident, while those who have a retirement plan are remarkably more confident.

Source: Ebri.org, May 2022

Got a Retirement Plan? Race Plays a Role

A new study takes a close look at who these people are and shows stark differences along racial lines. A large majority of Hispanic workers in the private sector -- two out of every three -- do not have access to a pension or 401k-style plan, and more than half of Black workers do not have access. Although the numbers are lower for Asians (45 percent) and whites (42 percent), they are still substantial.

Source: Bc.edu, May 2022

Small Business Owners Still Resistant to Starting a 401k Plan: Survey

At a time when many companies are boosting 401k benefits to attract and retain employees in a tight labor market, 74 percent of small businesses are still going without any plan at all. Key findings in new research commissioned by ShareBuilder 401k show that owners believe their business is too small and that 401(k)s are too costly. The survey, that polled 500 small business owners from across the country, reveals that only 26 percent currently offer a 401k plan. Responders cited three main reasons for not starting a plan.

Source: Prnewswire.com, May 2022

401k Investors Display Poise as the Market Struggles

Alight Solutions has published the April update of its 401k Index, noting that despite equity markets posting their worst month in over two years, 401k investors were not making reactionary trades. There were no above-normal trading days in April, Alight says. However, net transfers were up slightly compared to March (.10% vs .09%) as investors moved money out of equities and into fixed income.

Source: Planadviser.com, May 2022

Challenges Aside, Retirement Confidence Remains High: EBRI

Despite the pandemic and inflation, American workers and retirees remain optimistic about living a comfortable retirement and one key factor that has helped is having a workplace retirement savings plan. This is according to the 32nd annual Retirement Confidence Survey measuring worker and retirement confidence conducted by the Employee Benefit Research Institute and Greenwald Research.

Source: Asppa.org, May 2022

PEPs Pique Small Businesses' Interest, But Hurdles Remain

A new survey finds that small employers are interested in learning more about pooled employer plans, although there is still some hesitancy on the road to implementation. More than half of smaller employers surveyed by the Secure Retirement Institute that are considering a DC plan are interested in learning more about PEPs, regardless of whether they have a retirement plan currently in place.

Source: Napa-net.org, May 2022

Younger 401k Participants Really Like TDFs, New Study Finds

Target-date fund investing continues to be prevalent in 401k plans, particularly among younger participants, according to an updated joint study released today by the Investment Company Institute and the Employee Benefit Research Institute.

Source: 401kspecialistmag.com, May 2022

Proposed Changes to Prohibited Transaction Exemption Procedures: White Paper

Congress provided for three kinds of possible exemptions from prohibited transaction prohibitions: statutory exemptions, class exemptions, and individual exemptions. The DOL has long had regulations setting forth the procedures for applying for class and private exemptions and has granted many such exemptions over the last 48 years. Now, however, the DOL is proposing changes to its procedures that would significantly modify the process and create additional burdens on applicants and independent fiduciaries covered by the exemption.

Source: Wagnerlawgroup.com, April 2022

Annual 401k Benchmarking Data on Participant Behavior and Plan Design Published

T. Rowe Price released "Reference Point," its annual 401k benchmarking report featuring year-over-year data and analysis on participant behavior and plan design. The report is based on the firm's full-service recordkeeping client data. Key findings are reviewed here.

Source: Prnewswire.com, April 2022

EBRI: Challenges Aside, Retirement Confidence Remains High

Despite the pandemic and inflation, American workers and retirees remain optimistic about living a comfortable retirement and one key factor that has helped is having a workplace retirement savings plan. This is according to the 32nd annual Retirement Confidence Survey measuring worker and retirement confidence conducted by the Employee Benefit Research Institute and Greenwald Research. In fact, in 2022, 82% of workers who are offered a workplace retirement savings plan are satisfied with it, a finding that has remained steady from 2021.

Source: Napa-net.org, April 2022

Employer Skepticism of "Traditional" Target-Date Funds Grows

Concerns from employers over the effectiveness of what it calls traditional target-date funds in achieving successful retirement outcomes are on the rise, according to new research from TIAA. The survey revealed that 66% of employers feel TDFs will help employees meet their retirement income needs, down from 78% in a previous survey in 2020.

Source: 401kspecialistmag.com, April 2022

401ks Still Seen as Gateway for Black Investors, but New Risks Emerging

While 401k plans have been the gateway to investing for many black Americans over the last several decades, that finding does not appear to be as prominent, as risky investments grow in popularity, a new survey finds.

Source: Napa-net.org, April 2022

Research Finds Americans Overwhelmingly Preserved Retirement Nest Eggs in 2021

The majority of DC plan retirement savers continued saving for retirement in 2021 through their DC plans such as 401ks, according to ICI's "Defined Contribution Plan Participants' Activities, 2021." The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 35 million participant accounts in employer-based DC plans at the end of December 2021.

Source: Ici.org, April 2022

OECD Issues Recommendations for the "Good" Design of DC Retirement Plans

Because DC retirement plans have increasingly become an integral, if not the main, part of most countries' overall pension systems, the Organization for Economic Co-operation and Development recently issued several recommendations for the implementation and management of these plans. The recommendations are intended to build trust in the design of DC plans by ensuring that the best interest of plan participants is considered, as well as to improve the robustness of retirement systems.

Source: Georgetown.edu, April 2022

More 401k Participants Say Having ESG Options Could Inspire Them to Increase Contribution Rate

According to the Schroders 2022 U.S. Retirement Survey, 74% of defined contribution plan participants who lack or don't know if they have ESG investment options in their plan, said they would or might increase their contribution rate if offered ESG options. This is up from 69% who said the same in 2021.

Source: Businesswire.com, April 2022

How to Help 401k Plan Sponsors Cut Through ESG Confusion

When it comes to Environmental, Social, and Governance investing, regulatory changes are a big source of confusion for advisors and plan sponsors. "It's no surprise," said Bonnie Treichel, Chief Solutions Officer at Endeavor Retirement, "the apparent ESG regulatory back-and-forth over the past several years is enough to make even an ERISA attorney's head spin." The good news: When it comes to ESG, she's confident that advisors and plan sponsors can move forward.

Source: 401kspecialistmag.com, April 2022

Auto-Enrolled 401k Loan Protection Has Potential to Save $2 Trillion

Auto-enrolled 401k loan protection is a powerful tool to preserve retirement savings, according to new research from the Employment Benefit Research Institute and Custodia Financial. The study shows a remarkable $1.96 trillion in retirement savings can be preserved if employers automatically enroll employees in 401k loan protection when they borrow from their defined contribution retirement plans.

Source: 401kspecialistmag.com, April 2022

Alight Solutions 401k Index: First Quarter 2022 Observations

With volatility returning to Wall Street, 401k investors were busy traders in the first quarter of 2022, according to the Alight Solutions 401k Index. There were 16 above-normal trading days in the quarter, a stark contrast to the 3 above-normal days seen in 2021. Net transfers as a percentage of starting balances were 0.46%, nearly equal to the percentage seen in the prior twelve months (0.53%). Net trading activity significantly favored fixed income.

Source: Alight.com, April 2022

Collective Investment Trusts and Good Governance Considerations: Whitepaper/a>

This 14-page paper explores relevant portions under each of the three legs of the regulatory triad. In particular, it examines the regulatory emphasis on the central role that good CIT governance -- in the form of well-designed and implemented bank-maintained processes and procedures -- plays in the ongoing management and operation of CITs. It also addresses and discusses how regulatory considerations inform CIT governance policies and may be reflected and implemented through good governance practices.

Source: Wilmingtontrust.com, March 2022

Whitepaper: Debunking Recordkeeping Fee Theories in Excessive Fee Cases

According to Euclid's whitepaper, "most large defined contribution retirement plans in this country have low recordkeeping fees – fees that are often five to ten times lower than the recordkeeping fees in most under $100 million small-asset plans." This new whitepaper, authored by Euclid's Managing Principal Daniel Aronowitz, reviews the common tactics used by plaintiff law firms to allege excessive plan administration fees.

Source: Euclidspecialty.com, March 2022

2021 Was Another Banner Year for Retirement Savers

Employer-sponsored retirement plans and individual retirement accounts reached almost $40 trillion in total assets by the end of last year, even as a recovering economy faced some key pain points, according to new data released by the Investment Company Institute.

Source: Planadviser.com, March 2022

Survey Reveals Retirement Confidence Gap Across Generations

American workers of all generations put comfortable retirement among their top life goals, yet a large percentage are uncertain about how to plan for it, when to retire, and how they will pay for it, according to the latest Retirement Security Survey released by the Principal Financial Group.

Source: Principal.com, March 2022

Using Retirement Account Features for Short-Term Savings

Workers can often use retirement savings for unexpected expenses. However, policymakers have expressed an interest in helping workers save for emergencies in ways that do not draw down their retirement assets. Some proposals to increase short-term savings envision new add-on accounts. Other proposals would use existing features of employer-sponsored DC plans that allow funds to be used for unexpected expenses. This 3-page report discusses two of such existing features: deemed Roth Individual Retirement Accounts and after-tax accounts within qualified retirement plans.

Source: Congress.gov, March 2022

Plan Sponsors Adding 401k Enhancements

Employers are eyeing changes to their DC plans to improve their employees' retirement security and financial wellbeing and to help with recruitment and retention. In a survey of 363 DC plan sponsors representing a broad range of industries, Willis Towers Watson found that 75% of respondents made a change to their plan in the last two years and expect to make at least one change over the next two years. An additional 14% of sponsors that did not make a change over the last two years plan on making at least one change over the next two years.

Source: Napa-net.org, March 2022

The Impact of 401k Cash-Outs on Retirement Income

Due to the power of compound interest, seemingly small amounts that leak from 401k accounts when people change jobs can cause major erosion to retirement nest eggs down the line. This paper seeks to examine what people do with their 401k balances when they leave an employer and look at the demographics of people who roll in balances to their new employers.

Source: Alight.com, March 2022

ESG and Participant Communications

Many plan sponsors are at various stages of considering how to incorporate ESG into their retirement plan design and fund offerings. Plan sponsors that have incorporated ESG in their retirement plans are looking for best practices when communicating with participants about ESG. This piece is intended to provide such plan sponsors and their service providers with a framework for engaging participants on the topic of ESG and how it may be integrated into their retirement plan communications.

Source: Dciia.org, March 2022

Three Barriers to ESG Adoption for U.S. DC Plans

DCIIA's Retirement Research Center interviewed 12 defined contribution practice leaders at leading U.S. consulting firms on barriers to incorporating environmental, social and governance considerations and investments in U.S. DC plans. According to these consultants, while interest in and demand for ESG continues to grow, implementation remains challenging. This report describes the three barriers to implementation identified by U.S. consultants.

Source: Dciia.org, March 2022

Plan Design Features to Drive Higher Savings Rates

Plan sponsors must find the right balance between adopting plan features that will help their employees prepare for a financially secure retirement and staying on budget with plan expenses. Different combinations of plan features are going to be right for different types of employers, depending on their employee demographics. A few recent studies may help plan sponsors and their advisors evaluate how combining various plan features could drive the strongest participant savings outcomes.

Source: Newportgroup.com, March 2022

Plan Document Foul-ups Can Cost You as a 401k Plan Sponsor

As a plan sponsor, there are many things you don't know about your plan document and you really should because the plan documents could be a major culprit in what ails your 401k plan.

Source: Jdsupra.com, March 2022

Retirement Policy: Aligning Plan Design With Effective Employee Engagement

This 10-page paper addresses how retirement program design can impact decisions that participants make to improve retirement security. Most defined contribution retirement plans, such as 401k plans, leave important and sometimes complex choices to the individual. Underlying the DC retirement plan structure is the assumption that individuals are equipped to make decisions in their own best interests, and that they will do so. However, this assumption might not always be accurate, especially if individuals lack the resources and/or knowledge needed to make informed choices.

Source: Actuary.org, March 2022

Retirement Savers Show Confidence in Current 401k Model

A recent ICI survey found that a majority of Americans dislike the idea of government-controlled investment options and are confident in their ability to make their own asset management decisions.

Source: Planadviser.com, March 2022

Reviewing Fees, IPS Top Focus of Large DC Plan Sponsors

Large plan sponsors continue to be laser-focused on fees, but they also will be taking a close look at their investment policy statements and conducting formal fiduciary training in the coming year. These are among the findings in Callan's 2022 Defined Contribution Trends Survey. Now in its 15th year, the survey reviews key findings from 2021 and expectations for 2022 for DC plan sponsors.

Source: Napa-net.org, March 2022

DC Plans Continue Laser-Focus on Fees, Exclusive Callan Survey Finds

Defined contribution plan sponsors will continue their sharp focus on fees, according to Callan's 2022 Defined Contribution Trends Survey, but they also will be taking a close look at their investment policy statements and conducting formal fiduciary training in the coming year.

Source: Callan.com, March 2022

Schwab Report: Self-Directed 401k Balances Higher

According to Charles Schwab's latest SDBA Indicators Report, the average account balance across all participant accounts finished Q4 2021 at $352,764, a 6.4% increase year-over-year and a 3.4% increase from Q3 2021.

Source: Businesswire.com, March 2022

How Simple Reframing Can Boost Retirement Savings

"Pennies" over "percent"? A new study finds that a simple change in information architecture, such as how the savings rate is framed, can lead to a significant boost in savings behavior among lower-income employees.

Source: Napa-net.org, February 2022

Retirees with Pensions Slower to Spend 401k

A new study quantifies the impact of this transformation in the U.S. retirement system, where traditional pensions are now found almost exclusively in the public sector. The conclusion, by the Center for Retirement Research, is that retired boomer households lacking a pension seem more likely to rapidly deplete the 401k savings they rely on, "leaving them with more risk that they will outlive their savings."

Source: Bc.edu, February 2022

What Our Long-Term Capital Market Assumptions Mean for DC Plans

The rise of DC plans in the U.S. over the past four decades occurred in an environment of secular disinflation and falling interest rates. That environment has come to an end. Strategies that worked for DC plans in the past may be less successful in the future. More than ever, the ability to incorporate forward-looking views on markets will be critical to keeping participants on the path to a secure retirement.

Source: Jpmorgan.com, February 2022

Research Finds Americans Remain Committed to Saving for Retirement

Defined contribution plan participants' contribution activity remained strong through the first three quarters of 2021 according to ICI's "Defined Contribution Plan Participants' Activities, First Three Quarters of 2021." This ongoing study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of September 2021.

Source: Ici.org, February 2022

Alternative Investments in DC Plans

This comprehensive overview, in slide-deck format, covers the investment case for private real estate, hedge funds, and private equity, with a focus on what's new in terms of the offerings available for each type of alternative and how can each type of alternative add value as an investment in a DC plan? It also examines related opportunities, considerations, and challenges. The final pages cover potential next steps for fiduciaries interested in implementing alternatives.

Source: Dciia.org, February 2022

Survey Finds Pandemic Is Impacting Canadians' Ability to Save for Retirement

Almost half (44 percent) of Canadians agreed the coronavirus pandemic has negatively impacted their ability to save for retirement and, as a result, 31 percent have changed their financial priorities, according to a new survey by Edward D. Jones & Co. The survey, which polled more than 1,500 adult Canadians, also found 33 percent of respondents said they're planning to contribute to their registered retirement savings plan, while 52 percent said they plan to forego their RRSP contribution and another 15 percent are undecided.

Source: Benefitscanada.com, February 2022

A Practical Guide for Selecting DC Plan Lifetime Income Options

This 19-page paper is intended to provide plan sponsors and other fiduciaries with a practical guide to help in the selection of lifetime income investments. It first explains what it means to be a fiduciary and then discusses the fiduciary duties in the context of providing lifetime income options within DC plans. Although this paper primarily refers to ERISA and 401k plans, the general concepts and considerations apply equally to non-ERISA DC plans, including church, 457, and 403b plans.

Source: Groom.com, February 2022

Turmoil of Past Year Points to Shifting Retirement Priorities

Even with a long-term view of retirement among savers, the difficulties of the past year were enough to prompt changing outlooks on retirement and a significant shift in employment trends, according to a new survey. According to the findings, Millennials expect to retire at the average age of 61, but 25% are unsure when they will retire. Meanwhile, half of today's retirees report that they retired earlier than expected -- cutting short the typically highest-earning and highest-saving years -- citing health issues and employer decisions as the key drivers of retirement.

Source: Asppa.org, January 2022

401k Nondiscrimination Testing Study: What Percentage of Plans Fail?

For most employers, January kicks off a brand new 401k plan year. Now that all of the year-end plan amendments, participant notices, and new deferral elections are behind you, this is a great time to take a step back and look at the big picture for your 401k plan's governance and decision-making process and make sure your 401k plan decision-makers are properly authorized to make those decisions.

Source: Employeefiduciary.com, January 2022

401k Trading Activity in 2021 Lowest on Record

A bull market extension in 2021 meant better behavior on the part of retirement plan participants. 401k investors were infrequent traders and mostly content to watch their balances grow, according to the Alight Solutions 401k Index. The Illinois-based Alight found net trading activity for the year was 0.53% of balances, the lowest on record for the 401k Index, which started in 1997 and well below 2020's value of 3.51%. There were 3 days of above-normal1 activity, a stark contrast to the 47 seen in 2020 when the market was much more volatile.

Source: 401kspecialistmag.com, January 2022

Auto Features, Saver's Credit Boost Could Slash Retirement Deficits

Implementing certain legislative changes and other industry innovations could help significantly reduce the size of retirement deficits and enhance the retirement security of Americans, according to a new issue brief from EBRI.

Source: Napa-net.org, January 2022

Retirement Assets Held Steady in Third Quarter

Despite a number of challenges, total U.S. retirement assets were down only slightly at the end of the third quarter of 2021, according to new data from the Investment Company Institute.

Source: Asppa.org, January 2022

Auto-Enrollment Retirement Plans in OregonSaves

This new study looks at the impact of the first state-sponsored auto-IRA program on those who previously lacked access to a plan. It analyzes participation choices, inflow and outflow data between August 2018 and April 2020, and the evolution of account balances.

Source: Umich.edu, January 2022

More Employers Put 401k Savings on Autopilot

Employers are increasingly putting retirement savings on autopilot for their workers. About 62% of businesses with a 401k plan used automatic enrollment in 2020, up from 60% the year prior and 46% a decade ago, according to the Plan Sponsor Council of America, a trade group. Auto-enrollment leverages worker behavior (inertia, in this case) to their advantage. Workers receive a paper or digital notification ahead of time and can opt out, but most do not.

Source: Cnbc.com, January 2022

Employers Adding Roth 401k Option at a Fast Clip

The share of employers allowing Roth 401k savings has surged, giving more workers access to the financial benefits that accompany such contributions. But there are some roadblocks to employee use, such as automatic enrollment and the structure of 401k matching contributions.

Source: Cnbc.com, January 2022

Increasing DC Plan Default Deferral Rates a Better Driver of Higher Savings

A new research paper suggests that defined contribution plan sponsors should focus on increasing the default savings rate to help boost participants' retirement savings for new employees rather than increasing employer matching contributions.

Source: Plansponsor.com, December 2021

White Paper: Top Considerations for DC Plans in 2022

The memories of the last two years serve as motivation to focus efforts on the continued improvement of the financial stability and retirement preparedness of DC plan participants. Mercer believes that an approach with flexibility and participants at the center is key for plan sponsors who wish to have a resilient retirement strategy for 2022 and beyond. Here are five themes to consider as you plan for 2022.

Source: Mercer.us, December 2021

Most Common 401k Default Deferral Rate No Longer 3%

Perhaps the most interesting finding in the recently released 64th Annual Survey from the Plan Sponsor Council of America is that 3% is no longer the most common default deferral rate for automatically enrolled 401k plan participants. For the first time, 6% is now the most common deferral rate.

Source: 401kspecialistmag.com, December 2021

A Visual Depiction of the Shift From DB to DC Plans in the Private Sector

This 3-page report from the Congressional Research Service illustrates the shift from defined benefit plans to defined contribution plans that has taken place in the last 40 years.

Source: Congress.gov, December 2021

Total U.S. Retirement Assets Dip Slightly in Q3

Total U.S. retirement assets were $37.4 trillion as of September 30, 2021, down 0.5% from June 30, 2021, according to the Investment Company Institute's latest Quarterly Retirement Market Data report.

Source: 401kspecialistmag.com, December 2021

Measuring DC Plan Success Requires Going Beyond Common Metrics

Greater engagement and education from plan sponsors and recordkeepers are key, but better insights into employees' retirement readiness require being able to access a greater range of participant data points, including information about personal savings and assets outside of participants' DC plans, according to retirement planning professionals.

Source: Plansponsor.com, December 2021

DC Specialists and Their Value to Plan Sponsors

A recent Voya survey was developed to help DC specialists better understand the needs of their clients and prospects while giving plan sponsors a chance to voice their hopes and concerns. It found that plan sponsors are paying more attention to the value DC specialists bring to the table, including increased attention to plan design review.

Source: Plansponsor.com, December 2021

Retirement Plans Are Looking More SECURE

A record number of employees are eligible for and participating in 401k plans, and employers are increasing their default deferral limits in the wake of the SECURE Act, the Plan Sponsor Council of America has found. Several factors shaped the 2020 retirement plan year.

Source: Napa-net.org, December 2021

Would 401k Participants Use a Social Security "Bridge" Option?

Although annuities would ensure higher levels of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with post-retirement investing, the market for annuity products is minuscule. To address this, employers could increase the availability of lifetime income by adopting a Social Security "bridge" strategy within their 401k plans. The bridge option would use 401k assets to pay retirees an amount equivalent to their Social Security benefits so they can postpone claiming benefits, thereby increasing their monthly payment when they do eventually claim. This paper gauges workers' potential interest in a bridge option.

Source: Bc.edu, December 2021

Real Estate Investments Increasing in DC Plans

A new report suggests defined contribution plan investors have grown more sophisticated in their knowledge of the real estate asset class and many are looking closer at asset-level and manager performance.

Source: Plansponsor.com, December 2021

CITs, Retirement Income Products and ESG Investing Poised for Growth

As registered investment adviser aggregator firms continue to acquire smaller players in the defined contribution space, investment managers are starting to take notice of their growing influence in deciding DC plan investments, a recent study suggests. There has been a shift in distribution dynamics as many RIA firms look to centralize their investment analysis and research.

Source: Plansponsor.com, December 2021

TCRS Study Suggests Substantial Retirement Risks Remain

While most U.S. workers say they are saving for retirement through employer-sponsored plans or other means, a much smaller percentage say they are "very confident" they will be able to retire fully and comfortably. According to findings on the retirement outlook of U.S. Workers from the Transamerica Center for Retirement Studies, more than four out of five workers (82%) say they are saving for retirement through their current employer's 401k or similar plan and/or outside of work.

Source: Napa-net.org, December 2021

Worker Participation in Employer-Sponsored Pensions: Data in Brief

This 7-page report provides data on the percentage of U.S. workers who have access to and who participate in employer-sponsored pension plans. The data are from the National Compensation Survey, conducted by the Bureau of Labor Statistics.

Source: Congress.gov, November 2021

The 2022 Retirement Landscape Takes Shape

The widening retirement savings gap, improving financial wellness, and adjusting to lower return expectations are three themes shaping the U.S. retirement landscape going into 2022. A new study shows the events of the past two years have either accelerated these themes or shined a spotlight on them, and the response of individual savers, employers, and those that advise them are evolving as well.

Source: Planadviser.com, November 2021

CITs Continue Taking Over in 401ks, but the Change Isn't Always Easy

Investment providers launched just one target-date mutual fund series in the U.S. in 2020, while six pulled the plug on them, marking the second year in a row that the number of products on the market went down. Behind that trend, according to data from Cerulli Associates, is the rise of collective investment trusts, or CITs. The products, which are sponsored by banks or trust companies, function similarly to their mutual fund corollaries but don't have the same reporting requirements.

Source: Investmentnews.com (registration may be required), November 2021

Three Themes Shaping the 2022 Retirement Landscape

In its inaugural U.S. Retirement Market Outlook, T. Rowe Price offers insights on the major themes professionals at the firm expect to shape the retirement landscape in 2022. According to the paper, given the impact of the significant global events over the past two years, the three themes that the firm sees for next year are reviewed here.

Source: Napa-net.org, November 2021

2021 Best Practices Conference: Benchmarking Investments and Fees

During the final session of PLANSPONSOR's virtual 2021 Best Practices Conference, experts talked about the mechanics of benchmarking plan investments and fees, what to look for when benchmarking, and where to get help. Plan sponsors should consider two necessary elements when benchmarking investments. Meanwhile, whether fees need to be benchmarked depends on how they are paid.

Source: Plansponsor.com, November 2021

Pandemic Weakens Women's Retirement Security

Women have taken a disproportionate hit on retirement savings and financial well-being, says Transamerica report, which could have lingering repercussions.

Source: 401kspecialistmag.com, November 2021

Shining a Light on What Participants Want

Fintech has broad acceptance among younger people. As digital natives, younger generations are more open to digital-first ways of managing their finances. Results from the 2021 PLANSPONSOR Participant Survey indicate that 87% of respondents age 23 to 29 reported using some sort of fintech, and that percentage also holds for the 30 to 39 age demographic. The number drops to 75% for the 40 to 49 age group and 58% for 50- to 59-year-olds. The survey also suggests that the use of fintech correlates with participants' engagement with their plans.

Source: Planadviser.com, October 2021

The "Defensive" 401k Plan

While ERISA litigation has proliferated in recent years, the Supreme Court has pointed plan sponsors toward a way to help control plan disputes. The Roberts Court's ERISA jurisprudence has re-awakened the idea that one of ERISA's key tenets is that a plan's written terms matter. In other words, if plan sponsors want to reduce their exposure to litigation, one way to do so is by adding certain plan terms that mitigate risk. This column identifies some ways in which plan sponsors can amend plan language to manage and/or mitigate exposure to claims for benefits and other ERISA claims.

Source: Jenner.com, October 2021

Unanimous Support Seen for Workplace Retirement Plans

With anxiety running high about not having enough saved for retirement, a new survey finds that virtually all respondents want help saving for retirement while they are working. AARP's survey of 1,000 registered voters aged 25 or older reveals that 99.7% of respondents agree about the importance of being able to save for retirement through their paychecks. AARP notes that the views are similar regardless of political affiliation, income, or gender.

Source: Napa-net.org, October 2021

Only 31% of Hispanic Workers Participate in a Workplace Retirement Plan

While they're one of the fastest-growing population demographics in the country, Hispanic workers face major challenges in allocating enough money to retirement savings compared with other groups. In the report "A Closer Look Into The Finances of Hispanic American Households," behavioral researchers at Morningstar dug into the underlying causes of the lower savings rates for this group.

Source: Planadviser.com, October 2021

Surprising Findings on 401k Participant Student Loan Debt

Nearly one-in-three Baby Boomer and Gen-X 401k plan participants who have student loan debt also have outstanding 401k loans, a much higher percentage than Millennials or Gen Z participants. The research also shows Gen-Z joining the ranks of workers increasingly burdened by debt, entering adulthood with $27,900 in student debt on average. But notably, Boomers hold more than twice as much debt as these younger borrowers.

Source: 401kspecialistmag.com, October 2021

Changes in 401k Plan Asset Allocation Among Consistent Participants, 2010-2018

This paper provides an update of a longitudinal analysis of plan participants drawn from the EBRI/ICI 401k database. It examines how asset allocations change over the years within the accounts of consistent participants, that is, those who maintained accounts in each year from 2010 through 2018.

Source: Ebri.org, October 2021

Study Reveals That Americans Are Shifting Retirement Due to Pandemic

New research from Northwestern Mutual shows that Covid-19 has changed many Americans' retirement plans, with over one-third (35%) saying it has either moved up or pushed back their target retirement age. Almost a quarter (24%) plan to retire later than previously expected while 11% plan to retire earlier.

Source: Prnewswire.com, October 2021

Managed Accounts and TDFs Better Together Than Apart, Research

For years plan sponsors and consultants have compared the outcomes of managed accounts and target-date funds within workplace retirement plans. The thinking was that plan sponsors and consultants should choose one or the other to offer retirement plan participants. New research and analysis from Empower Institute show that managed accounts and target-date funds instead complement each other and together can improve investors' retirement savings outcomes.

Source: Empower-retirement.com, October 2021

Department of Labor Teases Cryptocurrency Interest

Hinting that the DOL is currently working on guidance related to cryptocurrency, the Acting Assistant Secretary for the DOL's Employee Benefits Security Administration recently commented that the DOL finds the prospect of cryptocurrency investments in 401k plan lineups "troubling." This may be a sign of DOL focus on the increasing frequency of ERISA plan investments in cryptocurrency vehicles, including funds with cryptocurrency exposures.

Source: Morganlewis.com, October 2021

Addressing Racial Inequities in Retirement Savings

Lower 401k contribution rates by Black employees are often overlooked. The latest survey, conducted in December 2020 among 2,104 U.S. adults with $50,000 or more in household income, found that historical disparities remain pronounced, even when excluding low-paid workers. HR leaders need to take a broad look at what they can do to help employees save, bearing in mind the challenges faced by members of historically disadvantaged communities.

Source: Shrm.org, September 2021

Cumulative Benefits of Retirement Income Solutions in Our DC System

This 13-page paper seeks to summarize the primary benefits of in-plan income solutions and will break down the benefits by participants, sponsors, and the societal benefit of enhanced retirement security achieved through the adoption of guaranteed income options within our DC system.

Source: Iricouncil.org, September 2021

How DC Plan Defaults Can Evolve to Improve American Retirement Security

From auto-enrollment to auto-escalation to auto-income. This is a 14-page paper on the evolving solutions available to sponsors, addressing fiduciary and portability concerns, and next steps for plan sponsors, recordkeepers, insurers, and consultants.

Source: Iricouncil.org, September 2021

Recordkeepers Planning to Amp Up Cyber Staff

In response to an increased threat of retirement account fraud, nearly a third of recordkeepers expect to boost their cybersecurity staff going forward, a new report from Cerulli finds. Even though plan providers have always been subject to cyberattacks, this is an issue that has become more acute in recent years, particularly during the remote work environment when many employees are working on less secure home networks and personal devices during the pandemic.

Source: Napa-net.org, September 2021

How Retirement Concerns Vary Among Ethnicities

A new study finds distinct differences among ethnicities regarding how they view their retirement risks and worries, as well as their interest in getting help from a financial professional. According to Allianz Life's 2021 Retirement Risk Readiness Study, the majority of Americans who identify as “BIPOC” -- black, indigenous, and people of color, including Hispanic and Asian Americans) -- believe they won't have enough saved for retirement (52% black, 56% Hispanic, and 62% Asian).

Source: Napa-net.org, September 2021

Five Plan Committee Missteps

There is frequently a difference between doing what the law requires and doing everything that you could do as a plan fiduciary. That said, there are things that plan fiduciaries must do, and things that, while not required, can keep the plan, and plan fiduciaries out of trouble. Here are five of those latter things.

Source: Napa-net.org, September 2021

ERISA and the Challenges of Using ESG in Retirement Plan Investing

It can be helpful for employers and retirement plan fiduciaries to understand the ERISA issues created by using ESG criteria in selecting and managing retirement plan investments, including why this remains an area of changing legal standards, especially in the last few years. This 2-page piece looks at the issues.

Source: Morganlewis.com, September 2021

Six Things Employers Need to Know Before Offering Cryptocurrency in 401ks

Cryptocurrencies are currently one of the hottest topics in the world and for good reason. Bitcoin's fluctuations over the past year have some employees and retirees asking to include cryptocurrencies in their employer-sponsored 401k retirement plans. The potential for negative valuation swings, on the other hand, has others saying they might be too risky for retirement savings. This Insight will provide six key considerations for Plan sponsors before considering including a cryptocurrency option in your retirement plans.

Source: Fisherphillips.com, September 2021

Exploring the Process of Adding an Income Solution to Your Retirement Plan

The author provide plan sponsors with a foundation from which to approach the fulfillment of fiduciary duties and confidently select an appropriate product to add as a retirement income solution to their plans.

Source: Iricouncil.org, September 2021

The Impact of 401k Cash-Outs on Retirement Income

Due to the power of compound interest, seemingly small amounts that leak from 401k accounts when people change jobs can cause major erosion to retirement nest eggs down the line. Fortunately, new and innovative ideas, such as auto portability, can help curb this leakage and preserve retirement assets. This paper seeks to examine what people do with their 401k balances when they leave an employer and looks at the demographics of people who roll in balances to their new employers.

Source: Alight.com, September 2021

What Participants Want From Employers' Retirement Plan Websites

More employers have been using retirement plan participant websites as a means of communication and education than they did in the past. A recent study found 81% of participants have logged into their accounts, with most signing in to check account balances or review investment options. Research finds that using certain strategies can make websites even more appealing to participants.

Source: Plansponsor.com, September 2021

CIT's Role in the Retirement Space

The expanding retirement industry means plan sponsors will want to diversify their investment options and look to their asset managers to meet the need. Asset managers should take note of plan sponsors' need for more efficient and affordable ways to diversify their investment options. Part of that involves looking to the products that can help. Collective investment trusts are a natural choice for multiple reasons.

Source: Northerntrust.com, September 2021

Analyzing the BrightScope DC Plan Data in the Context of Excessive Fee Lawsuits

The annual report provides insights into plan design and trends and represents the most comprehensive data available to understand defined contribution plan fees. BrightScope has an express disclaimer that its report is for general information on fees and is not intended for benchmarking the costs of specific plans. But plaintiff lawyers often ignore this disclaimer and cite the report to support their excessive fee claims, and thus it is important to analyze the BrightScope data to evaluate how your plan compares. This article documents the significant trends and statistics in the BrightScope report.

Source: Euclidspecialty.com, September 2021

Most Retirement Plan Savers Aren't Tapping Their Accounts Despite Pandemic

Americans continued to save for retirement through DC plans during the first half of this year despite ongoing economic stresses brought about by the COVID-19 pandemic, according to ICI's "Defined Contribution Plan Participants' Activities, First Half 2021." The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of June 2021.

Source: Ici.org, September 2021

401k Plan Sponsors See Value in Using a Single Recordkeeper

Plan sponsors using a single recordkeeper to manage multiple retirement plans see better overall time savings and fewer administrative drawbacks when compared to sponsors using multiple providers. That's a key finding from a survey released today by Principal Financial Group, which also revealed that respondents with one provider also reported higher rates of employee satisfaction and engagement with retirement benefits.

Source: 401kspecialistmag.com, September 2021

When Fiduciaries Fail

Reports are plentiful of employers trapped in legal proceedings for violating their trusted role as the overseer of their employees' retirement plans. Until recently, we only heard rumors of suspected lethargy among the overseers. But the frequency and number of failed leadership allegations among them on social media, in the 24-hour broadcast news cycle, and print media tends to taint the reputations of all employers in the public eye. Wisdom calls for a change in fiduciary behavior.

Source: Rolandcriss.com, September 2021

Plan Sponsors Should Eliminate Jargon in Their Communications

An Empower white paper makes the case that retirement plan sponsors and advisers should use simpler language in retirement plan communications, finding that participants are more likely to act on their retirement plans if they receive direct language. The report, conducted with research from the Harris Poll, stresses the importance of simplicity in communications, explaining that financial terms such as "deferral" and "allocation" can scare employees away from participating in a plan.

Source: Plansponsor.com, September 2021

How Universal Access and a Refundable Saver's Tax Credit Can Transform Retirement Savings

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Georgetown.edu, August 2021

Rising 401k Contribution Rates, Fewer Plan Loans, Show a Return to Normal

The average annual 401k savings rate for plan participants reached a new high of 9.3 percent of workers' earnings this year, according to new research. Fidelity's analysis, released in August and based on 23,600 Fidelity-administered corporate defined contribution plans as of June 30, 2021, showed workers starting to feel more stability and a sense of normalcy, compared with the results of participant surveys Fidelity conducted last year.

Source: Shrm.org, August 2021

40% of 401k Participants Say Fees a Mystery, GAO Reports

Almost 40% of 401k plan participants do not fully understand the fees they are paying, a Government Accountability Office report released Thursday found. Moreover, 41% of participants incorrectly believe that they do not pay any 401k plan fees, according to the report.

Source: Pionline.com, August 2021

Whitepaper: Portfolio Allocation, Income and Spending in Retirement

How do people manage their income and spending in retirement? How do they adjust their asset allocation as they transition into retirement? Certainly, there is survey data on the subject and much-informed speculation. Yet the full picture -- based on empirical evidence that shows how people actually behave -- has remained elusive. No longer. Drawing on an Employee Benefit Research Institute database of more than 23 million 401k and IRA accounts, and JPMorgan Chase data for around 62 million households, authors studied 31,000 people as they approached and entered retirement between 2013 and 2018.

Source: Jpmorgan.com, August 2021

Employee Financial Stress Costs Companies Nearly $5B a Week

While employees struggled with their finances during the COVID-19 pandemic, a recent survey finds that the financial impact on organizations is even greater. According to results from BrightPlan's annual Wellness Barometer Survey, financially stressed employees reported an average of 15.3 hours of reduced productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers due to worsening employee financial health.

Source: Napa-net.org, August 2021

Here's How to Spur More DC Plan Participant Logins

Last year, the DOL established an e-delivery rule allowing plan sponsors to communicate retirement plan information electronically. But is there more that can be done to get participants to log in more often? A recent Cogent Syndicated study from Escalent provides some answers.

Source: Ntsa-net.org, August 2021

About | Glossary | Privacy Policy | Terms of Use | Contact Us

Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.