A new survey finds that while provider cyber security policies are of interest to plan sponsors and participant engagement matters, social media… not so much.
Deloitte’s Annual Defined Contribution Benchmarking Survey found that more than half (55%) of nearly 400 plan sponsor respondents have reviewed their provider’s cybersecurity policy and procedures within the past year, with another 25% conducting a review in the past one to five years. Confidence in cybersecurity policies is generally high, with 89% of respondents either very or somewhat confident.
The 2015 survey suggests that social media is still not getting lots of “likes” from plan sponsors: 69% reported they were not interested in using social media to interact with their record keeper and 70% were unsure or did not believe their employees would be either.
More than half of plan sponsors (55%) agree that predictive analytics offer valuable insight into improving defined contribution plan efficiency and effectiveness, but only 41% feel their organization understands how to use predictive analytics, and only about a quarter (28%) of plan sponsors are using predictive analytics.
Participation ‘Rates’
As for why employees participate in a defined contribution plan, the 2015 survey found that the personal desire to save for retirement at 40% (up slightly from 39%) overtook the leader from the 2013-14 survey, which was taking advantage of the company match at 35% (down from 43%). The third most-cited reason was auto-enrollment of employees (18%). This trio of reasons has combined to hold the top three spots in each of the last three surveys.
Automatic enrollment again scored high marks from plan sponsors in terms of having a positive impact on the average contribution rate (70%, up from 56%), plan participation rate (88%, up from 79%), and participant awareness (64%, up from 57%).
As for the primary reasons why employees do not participate, lack of awareness or understanding was the leading reason at 34% (up from 30%), while uncertain economy/job market continued its downward trend at 12% (down from 14% in the previous survey and from 24% in 2012). Asked about the tactics used to encourage savings and raise awareness of assets needed in retirement, the highest rated approaches were:
- general and multiple communications/education (83%);
- targeted communications (68%, up from 56% in the last survey); and
- group meetings (66%, up from 60%).
Asked to choose the most effective way to communicate with employees, the top three methods chosen by plan sponsors (and unchanged from a year ago) were:
- individual meetings (23%);
- group meetings (21%); and
- targeted communications (21%).
Plan Priorities
Asked to prioritize areas of importance to their organization’s plan, providing the right investments to help participants achieve retirement goals continues to top the list for 89%, followed by improving participant education at 86% and retirement readiness at 83%. Roughly two-thirds (65%) of plan sponsors are providing retirement readiness assessments to employees (up from 55% in the previous survey).
Improving plan governance saw the largest increase, with 69% of plan sponsors viewing this as very or quite important, compared with 57% in 2013-14. At the same time, reducing plan risk (77%), potentially reducing plan expenses (77%) and improving administrative services (61%) showed slight gains from the previous survey.
Plan Designs
About two thirds (62%) of plans are now employing step-up contributions, up from 46% in the previous survey. Utilization of the step-up feature continues to grow, with 7% of plan sponsors indicating that more than 50% of their participants are making step-up contributions (up from 6% in the previous survey).
As for in-plan retirement income products, just 2% of plan sponsors have added this option, with another 11% looking into it. At-retirement income solutions have been added by 5% of plan sponsors, with another 14% looking into it.
