Some retirement plan sponsors have switched their focus from saving money to helping employees plan for retirement, according to a study released Monday by Fidelity Investments.
Thirty-three percent of plan sponsors said their top concern now is whether their plans are effectively preparing employees for retirement financially, compared with last year when the largest number (32 percent) said their top concern was reducing business costs related to the plan.
The shift in attitude was revealed in the Plan Sponsor Attitudes Study, which included 1,124 sponsors of plans that have at least 25 participants and $10 million in assets.
To help employees achieve their savings goals, 82 percent of plan sponsors are making changes to their plan designs and 83 percent are changing the investment choices.
Ninety-two percent of plans use a financial advisor to help with their plans. Twenty-two percent said they want to change their advisors. However, that percentage dropped from the 38 percent who said they wanted to change advisors last year.
“We view the increased focus on driving plan participants’ engagement and savings rates as a positive shift,” said Jordan Burgess, head of specialist field sales overseeing defined contribution investment only sales at Fidelity Institutional Asset Management. “Plan sponsors can work with advisors to identify ways to boost retirement readiness for plan participants in addition to leveraging them as a resource to manage the challenges and costs of the plan.”
The changes being made to plans are ones that drive employee participation, the sponsors said. Thirty-nine percent said they added or changed a matching contribution, compared with 25 percent who reported the same change in 2017. The top changes to investment options included replacing an underperforming fund, adding an index fund or adding a lower-cost class of shares. Another emerging trend for plan sponsors was the decision to add a managed account program, Fidelity said.
Sponsors are adding retirement income goals to their plans. Fidelity said near retirees should plan on replacing 45 percent of their pre-retirement income to maintain a pre-retirement lifestyle.