U.S. employers eyeing innovative features for DC retirement plans, Willis Towers Watson survey finds
U.S. employers eyeing innovative features for DC retirement plans, Willis Towers Watson survey finds
A majority of U.S. employers are eyeing innovative features for their defined contribution (DC) plans to boost their value, fortify retirement savings and enhance employees’ overall financial wellbeing, according to a survey by leading global advisory, broking and solutions company Willis Towers Watson.
The survey also found employer interest in lifetime income options is accelerating as plan sponsors look for ways to help employees generate a steady flow of income in retirement.
The 2020 U.S. Defined Contribution Plan Sponsor Survey found two in three employers either have or are very interested in adding at least one innovative design feature to their plan.
The most popular feature reported is employee assistance with building emergency funds for rainy days through after-tax contribution provisions. Other features employers have adopted or are considering are student loan repayment options linked to the DC plan as well as allowing employees to choose between a variety of benefits, including DC plan contributions.
“Providing employees with a financially secure retirement goes beyond enrolling them in a DC plan,” said Alexa Nerdrum, managing director, Retirement, Willis Towers Watson. “Employers recognize the financial stress their employees are facing and understand the support a robust DC plan can bring during employees’ working years and in retirement.”
The survey also found momentum for lifetime income options to help generate a steady stream of income in retirement from DC plans is accelerating. Interest in lifetime income solutions has increased fourfold since 2017, indicating an increased focus on retirement spending, not just retirement savings.
Roughly three in 10 employers currently offer or are considering offering a lifetime income in-plan option. Employees’ financial wellbeing and its potential impact on organizations is top of mind for many employers. About a third of respondents (34%) indicated that short-term financial stress among workers is creating workforce challenges, up from 26% three years ago. Additionally, 36% believe financial stress will present future workforce challenges.
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