Perhaps the reality that participants are ultimately responsible for saving for their own retirement is changing their attitudes about revisions to plan design focused on improving outcomes, according to a Northern Trust study involving 1,000 current and former 401(k) plan participants.
Some plan sponsors are reluctant to implement plan design changes that would clearly benefit their employees — not out of fiduciary concern but because they are not sure how participants would react. Is that concern warranted? Some findings in the Northern Trust study may help answer that question:
• 54% of participants would not object to re-enrollment into TDFs.
• While 54% indicated that daily access is important, 91% said that they would sacrifice daily access to be able to invest in products like alternative investments to achieve better returns.
• Though 76% never took a loan and 56% said that a loan should only be used for emergencies, 91% indicated that they are necessary.
Best practices in plan design include auto-enrollment into a managed investment at 6% or more with auto-escalators and a stretch match to 10% deferral. And a majority of participants favor a cap on auto-escalation of over 10%.
