Transamerica Retirement Solutions has released a report in partnership with the American Hospital Association examining trends affecting DC and DB benefit plans in the not-for-profit health care market. The report reveals that health care plan sponsors are making adjustments to help employees adequately prepare for and be engaged in retirement.
More specifically, the report indicates that health care plan sponsors are implementing programs to address employee engagement, since 75 percent of plan sponsors see it as one of the biggest challenges of managing a retirement plan. The programs they are implementing focus on educating and informing participants through a variety of means, such as meetings, print and electronic campaigns, and investment advice.
The report also shows that plan sponsors are trying to optimize plan design in a handful of ways in order to help employees achieve retirement goals:
• Retirement Readiness: While participation rates are still used to measure plan success, retirement readiness measures are beginning to replace them, with the percentage of plan sponsors using retirement readiness as a performance indicator rising to 35 percent in 2014, up from 23 percent in 2012.
• Increased Default Deferral Rates: While 87 percent of plan sponsors surveyed said their plan’s default deferral rates were not high enough, the report shows signs of increase, with the percentage of plan sponsors offering automatic enrollment default rates of 3 percent or less dropping from 70 percent in 2012 to 48 percent in 2014; over the same period, the percentage of plan sponsors with default deferral rates of 5 percent or more nearly quadrupled.
• Streamlined Investment Options: Though many health care plans still offer 20 or more investment options, the percentage offering that many options decreased from 48 percent in 2012 to 39 percent in 2014.
To request a copy of the full report, “Retirement Plan Trends in Today's Healthcare Market — 2014,” send an email request to [email protected].
For more on Transamerica’s value-adds for advisors, visit their NAPA Firm Partner page.
John Adams is a writer for NAPA Net.
