Products December 11, 2018

HSA Bank Unveils Adviser-Driven HSA Investment Program

It offers an open architecture HSA investment lineup.

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HSA Bank has announced an adviser-driven health savings account (HSA) investment program. It enables advisers to offer an open-architecture investment lineup so that they can customize the lineup for each of their clients. The program also enables advisers to view participant activity and performance online.

Advisers have the option to set asset-based fees on investments, as well as to receive HSA referral compensation. It gives advisers direct access to the recordkeeping platform so that they can set up and manage HSA investment options for their clients.

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“HSA Bank’s new adviser-driven HSA investment solution combines our expertise in HSAs and advisers’ expertise in managing investments to enhance the plan sponsor and employee experience,” says Chad Wilkins, president of HSA Bank. “HSAs can be a valuable retirement savings tool, and we’re excited to work with advisers to positively change the ways employees manage their health care finances now and in retirement.”

Aspire Financial Services is providing the investment technology for the program.

Data & Research December 11, 2018

PSCA Finds Improvements in 401(k) Plan Design

More plan sponsors are making Roth contributions available, automatic enrollment default deferral percentages are increasing, and company match formulas are becoming more generous.

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Seventy percent of 401(k) plan sponsors made Roth contributions available in 2017—a significant increase over 2016, according to the Plan Sponsor Council of America’s (PSCA)’s 61st Annual Survey of Profit Sharing and 401(k) Plans.

This is especially true among plans with fewer than 50 employees (up from 55.6% in 2016 to 67.7% in 2017).

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Plan sponsors continue to adopt automatic enrollment, with 61.2% of plans now using it. However, automatic enrollment is still mostly applied to new hires only. The most common default deferral rate for automatic enrollment is 3%. However, 60% of plans use a default deferral rate with automatic enrollment of more than 3%—up from less than 30% of plans 10 years ago.

The use of mobile technology to provide plan services to participants continues to increase—it has doubled since 2014 and in 2017 was used by 43.6% of plan sponsors.

The survey also found 90% of plans now have an investment policy statement (IPS). They are less prevalent among smaller plans. In addition, nearly one-third of plans provide a suggested savings rate for participants. More than four in 10 suggest a rate of 10% or more. And, one in five plan sponsors actively encourage participants to keep assets in their plans after retirement.

Boosted savings and contributions

According to the survey, participants saved an average of 7.1% of pay in 2017, up from 6.8% in the previous two years.

Nearly all plan sponsors surveyed make contributions to their plans (only 37% do not). The average company profit sharing contribution increased to more than 5% of pay for the first time. It increased from 4.8% in 2016 to 5.1% in 2017. In addition, there is a shift to a more generous 401(k) matching formula. The survey found the use of dollar-for-dollar matching above 3% of pay (most commonly to 6% of pay) increased by nearly 50%, from 24.1% in 2016 to 35.8% in 2017.

“Design enhancements that leverage behavioral finance insights such as automatic enrollment, coupled with generous employer matching contributions, are helping build a more financially secure retirement for America’s workers,” says Hattie Greenan, PSCA’s director of Research and Communications.

PSCA’s 61st Annual Survey reflects the 2017 plan-year experience of 605 DC plan sponsors. The full printed survey is available for pre-order (electronic copies are available now).

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