NASHVILLE — Responsibility, opportunity, and challenge: Welcome to the world of plan sponsors. They want to encourage participation in their retirement plans, and they want to encourage participants to save the maximum they're able so they can retire.
What are plan sponsors doing about this? Three simple things I heard about at the NAPA 401(k) Summit are auto-enrollment, auto-escalation, and improving plan communications and education.
Recommended For You
According to J.P. Morgan's study "2015 Defined Contribution Plan Sponsor Survey Findings,"over 60 percent of large plans and 45 percent of all plans are using auto-enrollment to drive plan participation. And nearly one half of large plans and one third of all plans are using auto-escalation to help get participants to save more over time.
Still, some plan sponsors don't think it's appropriate to encourage participants to save more, according to Mathew Greenwald, President and CEO of Greenwald & Associates. And he says that some are still concerned about using auto-enrollment and auto-escalation.
But who will educate participants if plan sponsors don't seek out help for them, asks Fred Reish, a well-known ERISA and 401(k) expert. For many, especially at the lower wage levels, this may be their only chance to get quality financial advice. The fact that plan sponsors might not be providing advice doesn't eliminate participants' need for advice, he says.
More interest in using target-date funds is something AllianceBernstein is seeing, via its 2015 survey results, as well as guaranteed income target-date solutions.
As a scary aside, AB also found that more than one-third of plan sponsors don't realize they are fiduciaries. Which, it says, is a higher percentage than results found in its 2011 survey.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
