Several states have acted to provide state-run plans for private-sector workers that may not have access to a retirement plan. However, a study finds some employers that offer defined contribution (DC) plans to their employees may discontinue those in favor of government-run plans.
According to surveys by LIMRA, 55% of employers surveyed said if a state-run plan were available, they are very or somewhat likely to stop offering their DC plan and have employees enroll in the state plan. Forty percent indicated they were not very likely or not at all very likely to do so.
Plan sponsors’ fear of plan lawsuits is highly correlated to willingness to discontinue a DC plan in favor of a state solution.
However, among those committed to continuing to offer their DC plans to workers, they say they care about the retirement readiness of their workers, are confident they are managing their plans properly, so that the lawsuits are not a concern. They also believe that the benefits of offering a plan outweigh the challenges, and have a strong sense of responsibility to help their employees meet their retirement savings goals.
A survey of employees found few are familiar with the state initiatives. More than half (6 in 10) workers support state mandates about workplace retirement savings, but they are not confident in government administration of retirement savings.
LIMRA found employees highly value many aspects of DC plans that will likely not be part of state-mandated solutions.
The full report of the surveys and/or an executive summary may be downloaded from here.