Experts Weigh in on Future of Retirement Plans
The advent of a new year traditionally is a time to take of stock of where one has been and what lies ahead. Accordingly, Transamerica recently issued “Prescience 2019: Expert Opinions on the Future of Retirement Plans,”
a report containing the results of its survey of experts from a wide range of sectors and perspectives on their expectations regarding retirement plans.
Highlights of the report include the following.
Service to clients will improve thanks to participant alerts and mobile technology tools that encourage and empower participants to do more to provide for their retirement security.
Plans and employers will engender confidence and positive attitudes: participants will be more comfortable with decisions that seek to place them on a path to a financially secure retirement, and employees will better appreciate retirement benefits.
Recordkeepers that provide advice and tools that give participants a sense that they have greater control and that their assets are growing will dominate the market by 2019. Providing plan participants with electronic alerts and tools will be a key part of engendering such a sense.
Mobile technology will figure even more prominently and will be a key factor in helping participants prepare financially for retirement. It will:
- win further acceptance by the public and government; and
- be used by nearly all plan providers to send alerts and information.
The experts expect that the government will mandate automatic enrollment and extend a safe harbor provision for automatic enrollment for 10% of pay at $0.50 on the dollar. Further, a majority of experts believe that with this safe harbor, half of plan sponsors using automatic enrollment will raise the default contribution rate on their plan to 10%.
By 2019, a majority of plan sponsors will change plan design so as to more effectively improve participants’ retirement readiness.
There will be demand for retirement solutions by non-highly and highly compensated employees (HCEs) alike, and there could be new retirement products to serve HCEs.
Retirement plan assets will rise 40% to $35 trillion by 2019.
Despite these positive trends, by 2019 nearly one-quarter of people age 65 and older will have jobs — and many of them for financial reasons. But just because they return to the workforce does not necessarily mean that they will do so in positions equivalent to those they once occupied.
“Prescience 2019: Expert Opinions on the Future of Retirement Plans” looks at trends in retirement plans that have $25 million to $1 billion in assets. The 62 experts surveyed include the American Retirement Association’s Nevin Adams, as well as 13 ASPPA members: Yaqub Ahmed, Paul D’Aiutolo, Ilene Ferenczy, Keith Gredys, Phyllis Klein, Michelle Marsh, Ryan Mullen, Stig Nybo, Fred Reish, Marc Roberts, Matthew Slyter, Gerald Wernette and Robert Wuelfing.