U.S. employers are becoming increasingly concerned over their employees’ financial well-being, and they are planning to take action to help their employees retire in a timely manner, according to a new survey by Willis Towers Watson, a leading global advisory, broking and solutions company. In response, the survey found that a growing number of employers plan to shift resources toward benefit adequacy and retirement readiness over the next two years.
The Retirement Plan Governance Survey of more than 300 U.S. employers found nearly four in 10 employers (39%) that offer a defined benefit and defined contribution (DC) plan view their employees’ retirement readiness as a current risk. Even more €” 44% €” view it as a risk two years from now. “Not surprisingly, retirement benefit adequacy and the financial fitness of their workers are growing concerns among employers,” said Dave Suchsland, senior retirement consultant at Willis Towers Watson. “This is particularly true among employers that offer only a DC plan. In fact, workers’ inability to retire in a timely fashion was identified as the top risk for nearly six in 10 of these plan sponsors. The ongoing shift to DC plans is now prompting employers to prioritize resources that promote retirement readiness.”
A majority of DC plan sponsors presently devote their top investment resources primarily to monitoring investment fees (74%) and manager performance (61%). However, employers are planning a greater focus on benefit adequacy and monitoring participant behavior moving forward. According to the survey, the percentage of DC plan sponsors that prioritize benefit adequacy will more than double in the next two years, from 18% to 38%.
“We are beginning to see governance committees adopt a more holistic view to DC oversight. They continue to review investments and plan fees, and they are also considering retirement readiness and how the program influences plan participants’ behavior to improve outcomes for them,” said Suchsland.
Source: Towers Watson