|BlackRock Releases National Survey of Workplace Retirement Savings Plans|
THE PLAN SPONSOR’S VIEW OF RETIREMENT’S FUTURE:
MOST OF TOMORROW’S “RETIREES”WILL STILL BE WORKING
Sponsors Concerned that Most Workers Not Saving Enough, Won’t Have Enough Money to Last Through Retirement
Strong Sense of Responsibility for Workers Drives Sponsors; Many Plans Moving to Strengthen Savings Options
An “Income Gap” Still Looms; Sponsors (and Workers) Believe Plans Should Provide Secure Income – But Currently Few Do
Nearly eight of 10 DC plan sponsors polled by
More than half of retirement plan sponsors – 55 percent – think most of their workplace retirement plan participants will have to work either full or part time in retirement. By contrast, just 15 percent of workers participating in DC plans anticipate needing to work for income in retirement.
“Retirement is going to change, and one of the biggest changes will
likely be an enduring role for employment even in retired life,” said
“Giving retired Americans sufficient financial security to retain a degree of choice about working in retirement – after a lifetime of employment - should remain a key goal of the nation’s retirement system,” he said.
The poll of 118 plan sponsors was conducted on the Internet during
“Today, DC plan sponsors have a uniquely informed view of the ongoing evolution of the corporate retirement system as well as retirement itself, shaped by experience day-to-day with what’s working in employee retirement planning – as well as recognition of areas where tangible progress still needs to be achieved,” said Castille. “Sponsors feel highly responsible for the retirement planning needs of their employees and – while many are concerned about workers’ retirement planning and prospects – they also realize there are ways to make the DC system work even harder on participants’ behalf.”
Sponsors Feel Strong Sense of Concern, Responsibility
Sponsor concern about workers’ retirement planning stretches across the spectrum of retirement financial needs.
Only 43 percent of corporate retirement plan sponsors are confident that their workers are saving enough now to get the monthly income they want in retirement; by contrast, about 67 percent of workers are confident that they are saving enough.
Four in 10 sponsors think the greatest financial challenge their employees will face is “not having enough money to last through retirement.”
Sponsors’ view of their responsibility outstrips even what workers themselves believe it to be. About two thirds of sponsors strongly agree an employer should educate employees on the realities of longevity in retirement, compared with just 25 percent of workers. Similarly, four in 10 sponsors – but just 22 percent of workers – strongly agree they should warn employees if they are not saving enough money to last through retirement.
Income Options Not Yet Widely Offered
About three quarters of sponsors – as well as 89 percent of workers - also believe that employers should provide employees with secure income generating options in their workplace retirement plan. Nearly nine of 10 (86 percent) sponsors agree (and 20 percent “a great deal”) that their participants would benefit from an in-plan guaranteed income solution.
Yet, just 11 percent of DC plan sponsors say they offer an in-plan guaranteed income solution, and of the companies not offering this solution, just 19 percent say it is likely that they will add it to their plan in the next 12 months. Nearly half of sponsors not yet offering an income solution said their biggest hurdle was not having the time to “conduct proper due diligence.”
“As traditional pensions wane, American retirees face a growing retirement income gap, and there is growing belief among participants and sponsors alike that DC retirement plans can – and should – help fill the gap,” said Castille. “Removing the hurdles to delivery of secure income must be a priority for the entire DC community.”
Providing Support for the “Accumulation Phase”
Sponsors are actively moving to provide new plan options for DC’s “accumulation phase,” in particular, the target date fund (TDF) – which automatically rebalances and reallocates assets over time to become more conservative and lower the chance of losing money as the worker nears planned retirement age.
Eight of 10 sponsors say they offer TDFs. Of these, 18 percent say they implemented a full plan re-enrollment, under which all participants were defaulted into a TDF or similar investment from their current allocations. Nine of 10 sponsors say that participants responded positively to the re-enrollment.
“Worker appreciation of the TDF approach shows the value of plan innovations that tangibly support good outcomes – in this case, better savings,” Castille said.
Need to Build Participant Appreciation of DC’s Value
Though big strides have been made in focusing DC on what participants most require for effective planning, the polls also suggest that sponsors need to redouble efforts to build worker appreciation of the value of key plan features.
For example, about seven of 10 sponsors think their plan has been helpful in warning employees if they are not saving enough money to last through retirement, but just 41 percent of workers share this view. Sponsor and worker views of plan helpfulness diverge as well on such key areas as educating employees on the realities of longevity in retirement (78 percent vs. 52 percent), and helping employees “get through retirement, not simply reach it” (71 percent vs. 50 percent).
“The DC system has come a long way, but sponsors and workers alike recognize that DC is still an evolving proposition and that there is much still to do before DC fulfills all its promise,” he said. “In particular, we need to help both sponsors and workers take advantage of emerging products that can help focus DC on solving retirement’s most urgent problems – especially the delivery of secure, life-long retirement income.”
About BlackRock Defined Contribution
Retirement is harder than ever before. That’s why many of the world’s
largest DC plans trust
BRG is a strategic market research and consulting firm that specializes
in the financial services and employee benefits industries. The firm
conducts projects dealing with both strategic and tactical marketing
issues, including loyalty and satisfaction, market segmentation, brand
assessment, product development, sales processes, and distribution
strategies. BRG focuses on applying market research information,
collected and analyzed using qualitative and quantitative data
collection techniques and methodologies, to provide solutions for
marketing-related challenges. The firm has extensive experience studying
DC participants, plan sponsors, retirement plan advisors, and search
consultants. BRG has conducted the leading syndicated plan sponsor,
participant and advisor studies since 2000. The
The opinions expressed are as of
Call 1-855-BLK-8880 for more information. Visit blackrock.com or iShares.com or contact your financial professional for a prospectus or summary prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal