Plan sponsors will do a better job of promoting retirement readiness among their employees during the next five years, according to a new study by Transamerica Retirement Solutions.
In its report, "Prescience 2017: Expert Opinions on the Future of Retirement Plans," the company asked 55 retirement plan experts from 45 organizations across the nation to make predictions about the trends most likely to take place in retirement plans with assets of $25 million to $1 billion by 2017.
Those surveyed estimated that 39 percent of plan sponsors will change their plan design to enhance the retirement readiness of participants; 55 percent will implement automatic enrollment and 45 percent of those will adopt default deferral rates of 6 percent or higher.
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The majority of retirement plan service providers will show employees if they are on track to achieve a successful retirement and how much they need to save to stay on track.
Twenty-five percent of plan participants will have looked into offering in-plan retirement income solutions, like annuities, and 10 percent will have made the leap and begun offering such a solution, the experts predicted.
The survey also found that service providers will keep searching for that next great retirement solution that will meet the needs of highly compensated workers who can't save enough through their defined contribution or nonqualified deferred compensation plans.
Experts surveyed also felt that the Department of Labor's revised rules defining who is a fiduciary will eventually apply to IRAs to "eliminate the regulatory competitive advantage retail advisors enjoy over plan advisors when meeting with a participant eligible for a distribution of plan assets," the report found.
They also believe the federal government will cut back on pretax contribution limits and could implement a lifetime cap on retirement plan contributions, like the proposal that President Obama included in his 2014 budget.
Workforce composition is expected to keep changing through 2017, with more employers hiring contract workers rather than full-time, salaried workers covered by retirement plan benefits. The panel of experts also predicted that retirement plan coverage in the 50- to 100-employee arena will grow to 70 percent, adding more than 1 million 401(k) participants.
"Industry experts expect that the demand from participants to understand their retirement forecast will combine with advances in technology to allow for increased personalization. Retirement plan sponsors and advisors can expect to see a rise in innovative tools that participants need for greater control over their retirement planning," said Stig Nybo, president of pension sales and distribution for Transamerica Retirement Solutions.
By 2017, those surveyed said they believe 59 percent of retirement plan providers will offer participants a personalized report that tells them how much to save in order to reach a fully funded retirement.
They also predict that mobile technology will become even more sophisticated and more readily available to participants to help them interact with their service providers and their accounts.
The survey was conducted in the second quarter of 2013. Transamerica chose survey participants based on their positions as thought leaders and experienced professionals in the retirement plans business. Transamerica Retirement Solutions provides customized retirement plan solutions for small and large organizations.
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