Growing Interest in Outsourcing, But Few Takers

A recent survey finds that a third of respondents are either already in an outsourced DC solution or have expressed interest in delegating all or a portion of their plan oversight.

And, according to Towers Watson 2014 North American Defined Contribution Plan Sponsor Survey, smaller plans are more interested in outsourcing than their larger counterparts.

That said, fewer than one-in-five (18%) are currently delegating investment oversight of their program (though nearly a quarter — 23% — of plans with $10 million to $199 million in assets are). Another 10% say they may be interested in exploring that option for their plan, and 3% say they may be interested delegating certain areas of investment oversight (say, for target-date funds).

Investment Options

In support of more effective solutions, sponsors continue to simplify the investment offerings to align with participant needs. Two-thirds (66%) offer between 10 and 19 investment options, and 86% of respondents use target-date funds as their default option.

During the last five years:

• 27% increased the number of options;
• 43% removed or replaced options; and
• 30% made no changes.

As for the next 12 months:

• 6% are looking to increase the number of options;
• 19% are looking to remove or replace options; and
• 75% are not planning to make any changes.