Top investment and plan priorities for sponsors during COVID-19

NEPC plan sponsor poll finds less damage done by pandemic so far, but that doesn't mean sponsors are complacent.

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Less than 5% of Americans have made early withdrawals from their retirement accounts during the COVID-19 crisis, according to a poll of plan sponsors by investment consulting firm NEPC, LLC.

Despite the low number of early withdrawals, about half (49%) of the plan sponsors who responded said that they do expect CARES Act related distributions to increase at least somewhat in the remainder of 2020.

And although 68% said they believe the current climate emphasizes the need for retirement plans that guarantee at least some level of return, 90% feel that their current menu of offerings is sufficient to withstand the financial crisis resulting from the pandemic.

The survey gave six investment and plan priority options and for the rest of 2020 asked respondents to rank them from 1-6 (1 being the top priority). The top-ranked investment priority was to “consider the role of active offerings within the program” with an average rank of 2.76. Running a very close second was “business as usual (2.7 average ranking).

By far, the top-ranked plan priority was “review participant communication and messaging” (average rank of 1.92). The next top plan priority was “consider and/or review advice offering” with a 3.06 average rank).

“Our survey reveals that with the tremendous volatility amid the COVID-19 pandemic, plan sponsors’ number one priority is communicating with participants to help them navigate this period of disruption and make the best decisions for their future,” Ross Bremen, Partner in NEPC’s Defined Contribution practice said. “Between the SECURE Act, the CARES Act, and the DOL’s ruling on private equity’s inclusion in plans, there is also tremendous legislative and regulatory change to react to.”

As for the plan sponsors themselves, a large majority (77%) said that their organization has not made any changes to its retirement plan match policies, while 52% said that their organization has not had any layoffs or furloughs.

Steve Salkin is the Managing Editor of ALM’s Law Journal Newsletters (LJN) division.

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