403(b) Plans Embracing More Auto Designs, Roth, Advisors

403(b) plan sponsors are increasingly embracing automatic plan designs – and the use of advisors, according to a new industry survey.

According to the 2018 annual 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA), the use of an investment advisor who acts as a plan fiduciary has increased by 40% in just four years. Moreover, the use of automatic enrollment increased by 45% from 2008, and is now used by nearly a quarter of plans (23.9%).

Just as impressive, more than a third of those use a default contribution rate higher than 3%. And among those offering auto-enrollment, more than half (56.6%) also offer auto-escalation – an automatic increase in the initial savings rate – up from 43% in 2015, according to the PSCA survey, now in its 10th year.

Those trends are important, since the non-profit sector accounts for at least 1 in 10 jobs in more than half of states.

The PSCA survey also found that nearly 60% of responding plans have an Investment Policy Statement, up from 46% in 2008, and those plans are slimming down their investment lineups; this year, 403(b) plan sponsors offered an average of 25 investments – down from a high of 31 as recently as 2013.

The number of employers making Roth contributions available to employees is up a whopping 169% from 2010, when it was offered by just 13.9%. In 2018 37.4% now provide a Roth option – and nearly half of plans with more than 1,000 workers do.

The PSCA 403(b) Retirement Plan Survey, based on responses from nearly 600 non-profit organizations across the U.S., is the only research report of its kind that delivers actionable data that plan sponsors need to help workers reach their retirement goals.

PSCA, part of the American Retirement Association, conducted its 10th annual survey of 403(b) plan sponsors in the spring of 2018. The survey received responses from 580 non-profit organizations that currently sponsor a 403(b) plan for employees and range in size and industry from small community-based organizations to large hospital and university systems.

SPECIAL OFFER FOR NAPA Net Readers: You can get your own copy of the 2018 PSCA 403(b) survey – the only research report of its kind that delivers actionable data that plan sponsors need to help workers reach their retirement goals – at a special rate. Here’s how:

Go to https://psca.memberclicks.net/index.php?option=com_mc&view=mc&mcid=form_257185

Go in as a non-member, and when given the option to buy the 403(b) survey, input the code “NAPA403b,” and you’ll be able to get this $495 value for just $295. But only through October 8!

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