According to a research report released by Transamerica Retirement Solutions, “Retirement Plans for Institutions of Higher Education,” more 403(b) plan sponsors in the higher education market are working with plan advisers, implementing automatic enrollment features and streamlining retirement plans.
The research found 55% of institutions with an exclusive arrangement with a single retirement plan provider monitor the retirement readiness of their plan participants, compared to 23% of institutions that work with multiple providers. Further, 60% of institutions that partner with an adviser monitor retirement readiness. Among the institutions that partner with a financial adviser, nearly half estimate that 50% or more of their plan participants are on track to achieve a successful retirement.
In 2014, only 28% of survey respondents characterized their plans as multi-vendor, compared to 48% in 2013. And in 2014, just 13% added investment options to their retirement plans, versus 27% in 2013.
In addition, in 2014, higher education institutions:
- Reduced the number of retirement plans offered (13% vs. 12% in 2013);
- Consolidated investments for multiple plans (11% vs. 9% in 2013); and
- Streamlined recordkeeping for multiple plans (11% vs. 6% in 2013).
The number of higher education 403(b) plans utilizing automatic enrollment rose to 44% in 2014 from 41% in 2013. The number of plans using automatic participant deferral increase rose to 23% from 8%.
Forty-five percent of survey respondents indicated they do not work with an adviser—down from 48% in 2013. Fifteen percent said they plan to hire an adviser within the next 12 months.
"The gradual shift away from defined benefit plans and the high number of pre-retirees have led many higher education institutions to pay closer attention to the retirement readiness of their employees," says Brodie Wood, vice president and national practice leader in Transamerica Retirement Solutions' not-for-profit group. "The streamlining of retirement plans, adviser partnerships, and the adoption of automatic plan features are a powerful combination that is helping higher education institutions guide their participants toward retirement readiness."
The “Retirement Plans for Institutions of Higher Education” study was fielded by Transamerica Retirement Solutions in May 2014. The sample consisted of 117 plan sponsors at institutions of Higher Education.
The research report may be requested from here.