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Plan Sponsors’ Top Priority: Retirement Readiness

Plan sponsors are committed to helping plan participants prepare for their retirement, says a study Brightwork conducted for the Principal Financial Group. The study looked at the responses of 283 plan sponsors, all of whom offer a 401(k), have more than 50 eligible employees and use the services of a paid professional to help them choose and monitor investment and service providers, design plans, conduct enrollment meetings and resolve problems with service providers. 

Brightwork reports that 66 percent of the plan sponsors said that they gauge the success of their 401(k) plan by the extent to which it effectively prepares participants for their retirement. And nearly 85 percent said they want to spend more time assisting participants in doing that. 

A strong majority — 76 percent — consider an employer match of employee contributions to a 401(k) to be the most effective way to improve the financial outcome for participants. Even more — 80 percent — offer one. Just under half automatically enroll employees as participants, but the study results show that plan sponsors’ interest in it is growing. 

Plan sponsors want to increase the ranks of those whom they can help be well-prepared. The study says that 69 percent of eligible employees participate in their employer’s 401(k) plan, but plan sponsors want to increase that to 82 percent. 

Plan sponsors expect a lot from their advisors, Brightwork says. Two-thirds of them said they expect their advisors to be aggressive in promoting retirement income planning that is centered on the outcome for participants.

And the results suggest that the plan sponsors are not sure that their advisors have made that their top priority. Strong majorities — 64 percent and 63 percent, respectively — think that their advisors’ main focus is on high plan participation rates and offering an attractive array of funds. 

John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.