Alarming headlines aside, a new flash poll finds that very few plan sponsors have suspended their matching contributions and few participants have taken early withdrawals.
The flash poll by independent consulting firm NEPC finds that while a majority of plans have adopted the expanded access provisions of the CARES Act, 72% of plan sponsors report that fewer than 5% of participants took early withdrawals from their retirement accounts due to COVID-19. An additional 19% of respondents reported that they did not adopt the CARES Act distribution provision.
In addition, 51% of respondents do not anticipate an increase in Coronavirus-related distributions for the remainder of 2020.
The findings are based on the responses of 105 DC plan sponsors fielded from June 8-22, 2020, among NEPC’s clients.
And in what would seem to allay some of the largest fears about the potentially detrimental impact of the pandemic and economic disruption on retirement savings, the flash poll found that the vast majority (77%) of employers reported that they have not changed or suspended their match and don’t currently plan to lower or suspend it.
In addition, 9 in 10 plan sponsor respondents are confident in their investment menu and believe they offer the right mix of options to withstand volatility. That said, 68% of respondents believe the current environment has reinforced the need for retirement income products that guarantee some level of income.
Investment and Plan Priorities
Plan sponsors were also asked to rank their investment and plan priorities for the remainder of the year, based on a scale from 1 to 6, with one being the top priority. The numbers below represent the cumulative averages.
Investment Priorities
- Consider the role of active offerings within the program (2.76)
- No special investment priorities, business as usual (2.77)
- Consider the role of passive offerings within the program (3.25)
- Review the performance and/or appropriateness of QDIA (if applicable) (3.31)
- Consider adding additional investment choices (4.08)
- Consider removing existing investment choices (4.83)
Plan Priorities
- Review participant communication and messaging (1.92)
- Consider and/or review advice offering (3.06)
- Review plan fees (3.28)
- Review cybersecurity practices (3.92)
- Review auto features (4.2)
- Review plan distribution rules (4.6)
“Our survey reveals that with the tremendous volatility amid the COVID-19 pandemic, plan sponsors’ number one priority is communicating with participants to help them navigate this period of disruption and make the best decisions for their future,” notes Ross Bremen, Partner in NEPC’s Defined Contribution practice. “Between the SECURE Act, the CARES Act and the DOL’s ruling on private equity’s inclusion in plans, there is also tremendous legislative and regulatory change to react to.”
A snapshot survey of some 137 plan sponsors conducted by the Plan Sponsor Council of America around the same time as the NEPC poll finds similar results with respect to whether plans are making changes to their matching formulas, adopting the CARES Act provisions and how participants are reacting to the CARES Act options.
