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Some New 2022 Plan Priorities for Nonprofits?

403(b) Plans

Retirement income and financial wellness have taken on a whole new luster when it comes to plan priorities among nonprofit plan sponsors.

In fact, the number of plan sponsors citing guaranteed income as a top priority more than doubled since last year, according to a new Plan Sponsor Council of America (PSCA) survey sponsored by Principal Financial Group®. 

Not only was an increase in focus on retirement income solutions evident, but there was also a 45% jump in prioritizing financial wellness tools. Just over 12% of surveyed organizations did so this year, versus 8.5% in the prior survey. 

“Though increasing plan participation and ensuring plan compliance are always top of mind for plan sponsors, we are seeing a shift in other plan priorities as organizations increasingly look to provide tools and support that will increase the long-term financial security of employees,” said Hattie Greenan, director of research and communications at PSCA.

Plan Priorities

The PSCA conducted a survey of 139 nonprofits in October 2021, finding the top priorities for plan sponsors had shifted in a few key areas since surveying done before the pandemic. The top 10 403(b) plan priorities for 2022 compared to 2020 are:




Increasing Participation Rates



Plan Compliance/Reducing Fiduciary Liability



Providing Retirement Income Options for Participants 



Providing Financial Wellness Tools



Increasing Deferral Rates



Enhancing Participant Education



Reducing Plan Cost 



Changing the Investment Lineup



Conducting an Advisor or Consultant Search



Conducting a Recordkeeper Search 



Asked to single out the overall primary objective for their 403(b) plan in 2022, 60% of organizations said they want to maintain their current plans as they are now—a challenge for many in the wake of the disruptions caused by the response to the COVID-19 pandemic, including financial and staffing concerns. Indeed, this was followed by the objective of using the plan to retain employees, reflecting the pressure nonprofits are facing amid the current labor shortage. 

Contribution Commitments

A powerful tool in that retention strategy looks to be the employer matching contribution. According to the survey, the pandemic has not greatly affected employer contributions to 403(b) plans. Most organizations (89.1%) have not made any changes to employer contributions, and only 1.4% of plans indicated that contributions are still suspended with no plans to restore them.

“The resilience of nonprofit 403(b) plan providers in light of what they have been experiencing over the past two years has been impressive,” said Kevin Morris, vice president and chief marketing officer, Retirement and Income Solutions at Principal®. “The increased focus on retirement income options and financial literacy is a positive sign toward improving overall financial security for employees in 2022 and beyond.”

Since last year, nearly a quarter (23.3%) of plan sponsors noted an increase in online education and 18% indicated an increase in webinars. These boosts in virtual options, rather than fading away, seem poised for further innovation and growth. About 46% of plan sponsors say they will engage a financial professional to support their employee education efforts in 2022.

The impact of managing employee education differed depending on the size of the organization. Large organizations were much more likely to have adjusted education methods (72.7%) than were smaller organizations (10.4%).

A copy of the full survey is available here.