PLANADVISER - September/October 2017 - 22

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Getting Retirement Ready
Sponsors' views toward 401(k)s are changing
DEFINED contribution (DC) plan sponsors
are beginning to understand the
importance of running their plans in a
robust manner to get people prepared
to retire with adequate income, J.P.
Morgan says in a new report, " Progress
Never Stops: How plan sponsors are
sharpening their focus to strengthen
plans and improve outcomes. "
When defined contribution plans
were first introduced 30 years ago, J.P.
Morgan says, sponsors simply viewed
them as vehicles to attract and retain
workers. Today, plan sponsors increasingly
feel responsible for getting their
workers retirement ready, the investment
firm says.
According to the report, 85% of
large plans and 65% of plans overall
automatically enroll their workers.
Seventy-seven percent of large plans
automatically escalate deferral rates,
as do 50% of plans of all sizes. Eighty
percent of large plans offer targetdate
funds (TDFs) on their investment
menus, as do 62% of all plans. Ninetythree
percent of large plans with qualified
default
investment alternatives
(QDIAs) use TDFs in that role, as do 78%
of all plans with QDIAs. However, only
20% of large plans conduct re-enrollments,
and a mere 13% of plans of all
sizes do so.
Eighty-two percent of plan sponsors
today say they feel a " very high " or
" somewhat high " sense of responsibility
for their employees' financial wellness,
up from 59% in 2013. Eighty-two percent
of employers also view their retirement
plan as a tool to ensure employees have
a financially secure retirement, up from
77% in 2013.
Further, 61% of employers now
analyze the percentage of their
employees on track to replace 80%
or more of their final salary in retirement,
up from 44% in 2013. In addition,
23% of employers say that getting the
maximum number of participants to
retire with adequate income is important,
more than double the percentage
Younger Millennials
Older Millennials
Generation X
Baby Boomers
Source: FICO
32%
36%
46%
45%
How Plan Sponsors Foster Retirement Readiness
Use automatic
enrollment
65%
Source: J.P. Morgan
that said so in 2013.
J.P. Morgan says there are areas
where plan sponsors can improve their
plans. While 54% of sponsors believe
their participants should be saving
TALKING POINTS
Long-Term Financial Goals
Various generations differ in confidence about having
the savings they need
10% of their salary or more, only 23%
say their average savings rate is at that
level. Only 56% of sponsors are confident
participants have invested their
assets appropriately. -Lee Barney
Auto-escalate
deferral rates
50%
Offer targetdate
funds
62%
Use TDFs as
the QDIA
78%
Conduct
re-enrollments
13%
Financially Insecure Americans
52%
37%
say they
are " not
very " or
" not at all "
financially
secure
Source: MassMutual
say
they are
behind on
saving for
retirement
63%
wish their
employer
helped them
with their
finances
51%
wish their
employer
did more to
educate them
about saving
for retirement
22%
say debt
is their top
financial
problem
22 | planadviser.com september-october 2017
http://www.planadviser.com
PLANADVISER - September/October 2017

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