Highlights from Fidelity’s Plan Sponsor Attitudes Survey

Posted on in categories General , News Update

Employers and retirement plan sponsors continue to be focused on participant outcomes when it comes to fine-tuning and managing their company’s retirement plans, Fidelity Investments’ 2020 Plan Sponsor Attitudes survey reveals. In this article, we will review survey highlights and what they reveal about plan sponsor considerations.

Top 5 Plan Sponsor Concerns

When asked what concerned them the most about their retirement plans, plan sponsors noted the following:

  1. Is the plan preparing employees financially for retirement?
  2. Am I meeting my fiduciary responsibilities?
  3. What about business costs related to the plan?
  4. Is the plan helping to attract top talent?
  5. Is the plan helping to retain top employees?

Advice Leads To Action

Interestingly, according to the survey, plan sponsors working with retirement plan-focused financial advisors took more forward-thinking plan action than those who were not, including the following plan actions over the last two years:

  • Changing the matching formula
  • Adding auto-increase
  • Increasing the auto-enroll deferral rate
  • Adding a managed account program
  • Adding a collective investment trust (CIT)
  • Adding a socially responsible/ESG fund

A Large & Small Plan Perspective

Across the board, plan sponsors working with financial advisors stressed the benefits of a working partnership between record-keepers and financial advisors as a key component of effective retirement plan management.

When asked why they began using a retirement plan-focused financial advisor, the answers differed according to the size of the retirement plan:

  • Plan sponsors with larger plans ($250M+) noted that they wanted to understand how well their plan was working for their employees and how they might improve it.
  • Plan sponsors with smaller plans ($3–$9M) stated that with company growth, their retirement plans have become more complicated to manage.

Concerns about Retirement Readiness Still Top Of Mind

Only 59% of plan sponsors surveyed believe their employees are saving enough for retirement and cite the following factors as issues that prevent participants from saving enough:

  • Current living expenses are too high
  • Lack of discipline in saving for future needs
  • High healthcare costs

Unfortunately, the global pandemic will only have intensified these challenges, and many employers and employees have been significantly impacted over the last year. As we progress through the pandemic with the vaccination rollouts and as the U.S. economic recovery continues through 2021 and beyond, plan design and refinement can be a useful tool to help narrow the retirement savings gap over time.

The following steps may help:

  • Encouraging an early start auto-enrollment for all employees can help with this.
  • Providing effective asset allocation – with appropriate investment options to help meet retirement readiness goals, including an effective qualified default investment alternative.
  • Helping participants save enough – setting a meaningful default contribution rate for those automatically enrolled.
  • Encourage increasing contributions – by setting an automatic annual contribution increase.
  • Considering the match – and how it may help encourage employee participation and contributions.

The takeaways from Fidelity’s latest plan sponsor attitudes survey might be helpful when addressing any issues or plan changes under consideration with your retirement plan.

We Welcome Your Questions

Your local ABG representative is always ready to help you with any questions you may have and help you determine the best steps forward. Contact us.