Are nonprofits shirking their responsibility regarding their employees' retirement futures?
A survey of 403(b) sponsors by the Plan Sponsors Council of America shows only 27 percent feel they have a responsibility to encourage savings and actually take measures to help workers do so.
Another 25.8 percent said they're aware of their responsibility as employers — they're just not necessarily doing anything about it. More than one-third of respondents said they encourage retirement savings but don't want to "force it," and 10 percent said simply offering a plan fulfilled their responsibilities.
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The past year saw something of an epiphany with sponsors in the private sector.
An American Century survey at the beginning of 2014 reported sponsors' tepid awareness for plan outcomes and employees' overall retirement readiness. But by the end of the year other data revealed something of a sea change among sponsors.
Another, more comprehensive, PSCA survey found sponsors were making great strides in incorporating financial wellness features to programs as way to improve outcomes of their defined contribution plans.
Will the nonprofit sector follow suit? Can it afford not to? Already at a competitive disadvantage for attracting and retaining talent compared to the private sector, nonprofits could find that disadvantage growing if they fail to evolve.
Bob Benish, executive director of the PSCA, sees some positives in the new numbers on 403(b) plans.
"We continue to see 403(b) plan sponsors make progress in building better retirement programs, and encouragement and education are key factors in helping participants create positive outcomes," Benish said.
The study reported that only 10.6 percent of nonprofit sponsors monitor potential participant outcomes by proving access to modeling tools and income-stream projections through a service provider.
Those aren't default services with private sector plans, but many of the latest plan design platforms are incorporating income-stream projections.
Incorporating desired outcomes in the planning process is vital for all retirement investors, said Aaron Friedman, leader of The Principal's 403(b) program.
"It's encouraging to see some plans are already measuring potential participant outcomes, but we believe it's something all plans should be doing to help participants know whether they're on the track for a more secure retirement," Friedman said.
The Principal sponsored the PSCA survey.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
