2021 and the retirement industry: What happened?

This year was not a back-to-normal year after all. True, many of us kept working in 2021, had fun with family and friends — in person — traveled, went back to the office. Then the rollercoaster of pandemic variants began, and with it came that familiar feeling of uncertainty. Through it all, the employer-sponsored retirement industry carried on.

Here’s my month-by-month recap of the retirement industry trends and topics I observed from my ringside seat in the employee benefits/retirement arena.

January: Litigation explodes

Retirement plan litigation exploded as plan participants with more time on their hands during 2020 closely examined their 401(k)s and called their lawyers. Previously, mostly large employers were taken to court, but now smaller ones also faced that risk.

February: DE&I comes to the fore

Company disclosures revealed to investors and the general public the stark lack of people of color in executive positions, on boards, and in certain industries, including financial services. The “S” and the “G” in environmental, social, governance investing began to gain importance.

March: Student loan debt reaches new heights

For many employees, student debt continued to be a concern, hampering retirement saving. Over 44 million Americans across multiple generations owe some form of student debt, and the total is huge: over $1.5 trillion. Many employers are considering offering student loan debt assistance, but the potential for federal forgiveness initiatives will affect what they decide to do.

April: Cybersecurity becomes a fiduciary duty

The Department of Labor, after a bit of “report shaming” from the General Accountability Office, finally provided some guidelines on cybersecurity for retirement plans.  Advisors, typically not big cybersecurity experts, looked for opportunities to provide value in an industry challenged by fee pressure.

May: State-sponsored retirement plans increase

More states began to offer or prepare to offer retirement plans for employees of small businesses who don’t have access to a retirement plan. Retirement plan providers created new plans to compete, and plan sponsors found the word “PEP” entering their vocabulary.

June: Annuities are demystified

Also thanks to the SECURE Act of 2019, which opened the way for guaranteed income sources in 401(k)s, annuities became less of a mystery and more of a possibility.

July: Recordkeeper M&As roll along

In the latest iteration of recordkeepers consolidating, one of the big recordkeepers, Empower Retirement, announced it was acquiring Prudential’s retirement business. Meanwhile, Congress looked back with satisfaction on a flurry of retirement bills proposed during the past couple of months.

August: Social Security COLA speculation

Interest in Social Security and the activities of big-name insurance/benefits industry companies was keen among our readers, as advisors and others tried to predict how large the 2022 Social Security cost-of-living adjustment (COLA) might be. (Spoiler alert: It was BIG.)

September: Employee benefits/retirement industry convergence

We saw an increasing number of M&As between employee benefits/insurance companies and retirement advisory firms. This is a trend to keep watching.

October: “Silver tsunami” continues

The Federal Reserve said an “early retirement boom” has come, as older workers, flush with increased home and investment values, leave the workforce. Hot on the heels of that trend, the idea of guaranteed income in retirement plans gains traction.

November: Dwindling fees

Advisory firms are continuing to be swallowed up by larger firms and insurance companies. Recordkeepers continue to consolidate — five companies now have a large share of the 401(k) plan market. Some have begun to wonder if new plan participant offerings are advisors’ solution to dwindling fees.

December: A “pause” extended, a rule commented on

The DOL ESG rule continued to make the news as the comment-reading phase began. And all the people dealing with student loan debt probably breathed a collective sigh of relief as President Biden extended the “pause” on federal student loan repayment.

So what’s ahead for 2022? We’ll have some expert thought on that soon. But, as they say in that teeny tiny print of investment disclosures, “Please remember that past performance may not be indicative of future results.”