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Less Choice Leads to Lower 403b Participation, Study


ARLINGTON, VA, November 13, 2018 -- New research published by the National Tax-Deferred Savings Association (NTSA) confirms that a decrease in investment choice and reduced access to advisors leads to lower retirement plan participation by employees in public education 403b plans.

The research, based on data from nearly 4,500 school districts across the United States, was published in "Improving Retirement Savings for America's Public Educators," a white paper authored by Jason J. Fichtner, Ph.D., a Senior Lecturer of International Economics at Johns Hopkins University's Paul H. Nitze School of Advanced International Studies.

The research finds:

  • 25% greater participation in plans with 15 or more investment providers compared to plans with only one provider.
  • Account balances are, on average, 73% higher among plans with 15 or more providers compared to single provider arrangements.
  • There is a 203% increase in average contribution rates among plans providing access to 15 or more providers compared to plans with only one provider.
  • Single provider arrangements have the lowest participation rate; 8% below the national average.

"Simply stated, the data reveals a positive and significant correlation between the number of choices/advisors and participation," notes Fichtner. "The research revealed that the number one factor driving participation and savings rates in school districts is participant choice."

Overall, the research finds that public employees who have access to retirement educational resources at the workplace and the assistance of financial professionals are saving earlier and contributing more to their 403b plans and have greater confidence in being able to achieve their retirement goals.

"The range of participation rates in America's public-school districts is dramatic, suggesting that the choices that each school district makes available to employees and the resources that they provide to help employees understand the benefits of participation are key differences in driving participation rates," noted Brent Neese, Executive Director of NTSA.

About the National Tax-Deferred Savings Association

Formed in 1989, the National Tax-Deferred Savings Association (NTSA) represents more than 5,500 practitioners, agencies, and corporate members. For nearly three decades, NTSA has been nationally recognized for its thought leadership and policy expertise with regard to public-sector retirement plans. NTSA represents its membership in Washington, D.C. and state capitals across the country to address issues and design retirement plans that improve employee outcomes. NTSA also provides high-quality education, professional development, and information resources for those involved in the 403b and 457b marketplace.


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