Retirement plan sponsors are increasingly becoming aware of the need for their participants to be adequately prepared to retire in a timely manner, a Willis Towers Watson survey found.
While monitoring investment fees is the primary concern of defined contribution plan sponsors, cited by 74%, followed by investment performance, cited by 61%, only 18% prioritize benefit adequacy. However, that is expected to rise to 38% in the next two years.
Among employers that offer both a defined contribution (DC) and a defined benefit (DB) plan, 39% view their employees’ retirement readiness as a current business risk, and 44% project that it will be a risk within two years.
Retirement plan factors that sponsors most frequently monitor are investment managers (78%), participation rates (69%) and contribution rates (67%). Only 19% monitor retirement readiness each quarter or more frequently. Thirty-eight percent monitor it annually, and 24% monitor it on an ad hoc basis. However, Willis Towers Watson expects retirement readiness to become more pressing for sponsors.
“Not surprisingly, retirement benefit adequacy and the financial fitness of their workers are growing concerns among employers,” says David Suchsland, senior retirement consultant at Willis Towers Watson. “This is particularly true among employers that offer only a defined contribution plan. In fact, workers’ inability to retire in a timely fashion was identified as the top risk for nearly six in 10 of these plan sponsors. The ongoing shift to DC plans is now prompting employers to prioritize resources that promote retirement readiness.”
Willis Towers Watson’s report is based on a survey of more than 300 U.S. employers. The full findings can be downloaded here.