Plan sponsors are applying re-enrollment schemes to bring their participants into TDFs, according to a new survey.
Nearly half (42%) of those polled said their organization was likely to conduct a re-enrollment within the next year, though only one in five said that re-enrollment needs to take place in order for their plan participants to increase the likelihood they have the necessary savings upon retirement.
More than a third (37%) of those planning to conduct a re-enrollment in the next 12 months also plan to shift to more custom TDFs in the same time frame, according to SEI’s Institutional Group survey of more than 230 DC plan sponsors with plans ranging in size from $25 million to over $5 billion.
Proprietary Split
That survey also finds that DC plan sponsors are evenly split when it comes to using TDFs offered by their recordkeeper and “off-platform” choices, but the gap widens by plan size.
For example, while 46% of the plan sponsor respondents were using non-recordkeeper or custom TDFs, nearly two-thirds (64%) of those plans with over $1 billion in assets are offering non-recordkeeper TDFs (23% offer custom TDFs). The percentages are nearly a mirror image among plans with less than $100 million in assets – 68% rely of TDFs provided by their recordkeepers, while just a third use either non-recordkeeper provided or custom TDFs.
In fact, nearly 4 in 10 (38%) of the mega plans (over $1 billion in assets) said they feel plan sponsors should not be offering their recordkeepers’ TDFs.
Plans with between $300 million and $1 billion in DC plan assets were the lowest user of custom TDFs. They also had the lowest rate of participants investing in that option. More than half (58%) of survey respondents said they would like to see more of their participants using the TDFs they offer. Nearly three-quarters (73%) said less than half of their participants use the TDFs they offer in their plan.
More than three-quarters of those polled said they offer between 6 and 15 funds in their TDF series.
The poll was conducted by SEI’s Defined Contribution Research Panel in December 2015 and completed by 231 executives representing DC plans ranging in size from $25 million to over $5 billion. This summary is the second of three parts.
