Nasdaq: WLTW finds, in keeping with a survey by Willis Towers Watson, which is looking US employers for revolutionary options in outlined contribution plans
ARLINGTON, Va., Dec. 7, 2020 (GLOBE NEWSWIRE) – A majority of U.S. employers are considering innovative traits for their defined contribution plans to increase their value, boost retirement savings and improve employee financial wellbeing overall, according to a survey conducted by the United States leading global consulting, brokerage and solutions company Willis Towers Watson. The survey also found that employers’ interest in lifelong income options increases as plan sponsors seek ways to help employees get a steady flow of income after retirement.
The sponsor survey on the US Defined Contribution Plan for 2020 found that two out of three employers either have an innovative design feature in their plan or are very interested in it. The most popular feature reported is helping employees build emergency funds for rainy days through post-tax contribution rules. Other features employers have adopted or are considering include student loan repayment options related to the DC plan, as well as the ability for employees to choose between different benefits, including contributions to the DC plan.
“Providing a financially secure retirement for employees goes beyond being included in a DC plan,” said Alexa Nerdrum, executive director of Retirement, Willis Towers Watson. “Employers recognize the financial burden on their employees and understand the support a solid DC plan can provide during their work years and retirement.”
The survey also found that the momentum for lifelong income options to generate a steady stream of retired income from DC plans is accelerating. Interest in lifelong income solutions has quadrupled since 2017, suggesting an increased focus on retirement spending rather than just retirement savings. About three in ten employers are currently offering or considering a lifelong income option on the plan.
The financial well-being of employees and its potential impact on organizations are of paramount importance to many employers. Around a third of respondents (34%) said that short-term financial burdens on workers lead to challenges for the workforce, up from 26% three years ago. Additionally, 36% believe that financial burdens will pose future challenges for the workforce.
“In a world with fewer and fewer workers reliant on traditional retirement plans, the responsibility for building adequate retirement plans and generating income in retirement rests primarily with them. Employers recognize this and are in the best position to provide support and guidance. And as our research shows, most employers are taking an active role in helping their DC plans achieve that goal, ”said Michele Brennan, US director of Defined Contribution Solutions at Willis Towers Watson.
Further results of the survey are:
- DC charges litigation:: The vast majority (80%) of Plan Trustees say managing fees is a major priority. This corresponds to a double-digit increase (14 percentage points) in the last three years, as the legal action against DC fees continued unabated.
- Risk management:: Over a third of respondents (37%) say managing the cybersecurity of participants’ accounts is their top risk management and fiduciary concern. About one in four (24%) is very concerned about selecting and monitoring investments and updating the Plan Trustees about regulatory and market trends.
- target– –Date fund:: The focus is increasingly on the “adjustment” of the target term fund (TDF). The survey found that the number of committees examining the suitability of the TDF for attendees’ needs increased by 53%.
- Delegated Investment advice:: The percentage of Plan Trustees using delegated investment advisory services has more than doubled over the past three years, from 6% in 2017 to 15% this year.
- Reinstatement of the employer Contributions:: The majority of employers who suspended or cut employer contributions this year expect to reinstate them by 2021, with 60% reintroducing contributions at the same level as before their suspension / cut.
- Inclusion and diversity: Nearly two-thirds of employers have reviewed or plan to review various aspects of their DC plan as part of their inclusion and diversity strategy.
- fees:: Three in four respondents (75%) have compared their recording fees over the past three years, with many having meaningful results. Around two-thirds (64%) said their benchmarking resulted in lower management fees, while one-third (32%) reduced investment costs.
ONEabout the survey
The U.S. Defined Contribution Plan Sponsor Survey for 2020 was conducted in September and is based on responses from 464 U.S. employers who sponsor at least one DC plan. Fifty-two percent of respondents had plan assets of $ 1 billion or more.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broker, and solutions company helping clients around the world turn risk into a growth path. Willis Towers Watson dates back to 1828 and employs 45,000 people in more than 140 countries and markets. We develop and deliver solutions that manage risk, optimize benefits, nurture talent and expand capital power to protect and empower institutions and individuals. Our unique perspective enables us to see the critical interfaces between talent, assets and ideas – the dynamic formula that drives business performance. Together we develop potential. Learn more at willistowerswatson.com.
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