Changing Perceptions of Plan Challenges, Success

A new retirement readiness survey found an increasing number of plan sponsors point to participant outcomes, not gross participation rates, as the best measure of success for an employer-sponsored retirement plan.

Released by Transamerica Retirement Solutions, the “Report on Retirement Plans 2013: The Road to Retirement Readiness” compiled data on both the defined contribution (DC) and defined benefit (DB) plans of U.S. corporations with at least 1,000 employees. In their analysis, researchers found that 41% of respondents said helping employees accumulate retirement income is the primary goal of their plan—a significant jump from the 35% measured in 2012.

Researchers also asked respondents about the challenges they face in meeting retirement plan goals. To that end, 60% of plan sponsors reported “keeping up with regulatory changes” as a primary hurdle to plan success.

Sponsors also indicated that “motivating employees to save adequately” (55%) and “helping participants invest wisely” (46 %) are primary challenges in the industry. The study found that nine out of 10 plans (90%) reported average contribution rates below the “10% of income” target widely considered to be a best practice. In fact, 46% of sponsors reported an average contribution rate of 4% or less. 

Respondents also suggested that rising health care costs have complicated their attempts to address retirement security.

Researchers used the data to identify ways sponsors are meeting these challenges. Examples of those measures include offering automatic enrollment features, which are currently included in nearly half (48%) of the 401(k) plans managed by sponsors interviewed for the survey. Sponsors can also try streamlining investment options and utilizing online resources that provide access to saving and investing guidance.

To request a full copy of the report, send an email to