Findings from the 2024 U.S. Defined Contribution Survey
Defined contribution (DC) plans are an integral tool to support employees’ financial health throughout their careers and into retirement. In light of new plan design options arising from SECURE 2.0 and regulatory changes, as well as employee concerns over managing their day-to-day finances, employers are increasingly aligning their investment in their DC plans to support their employees holistically, including day-to-day financial resilience, wealth accumulation and retirement protection priorities.
Employees report higher levels of engagement and retention when employer benefit packages meet their needs. Thus, there’s an increase in appreciation for benefits that give employees the flexibility to meet their current financial needs. When employers were asked which benefits or features they would be interested in adding to their DC plan, the top four emerging features were: student loan matching, in-plan emergency savings, integration with HSA/out-of-plan emergency saving, and in-plan lifetime income options.
To determine how best to address employee concerns, employers are focusing more on segmented employee data analytics, with two-thirds of survey respondents using such methods to better assess the value of their DC plan for all employees. In addition, the financial measures they are monitoring go beyond traditional savings and participation rates to include other measures of financial insecurity.
Employers are reducing administration efforts and managing fiduciary risk by transferring plan delivery responsibilities. This allows them to focus on improving participant outcomes. Today, almost nine out of 10 (87%) organizations have transferred at least some form of plan management responsibilities, driven by employers’ desire to reduce administration efforts (58%) and fiduciary risks (55%), while also improving participant outcomes (52%).
Increased options to shift plan management responsibilities to third parties, such as pooled employer plans and investment outsourcing, provide meaningful opportunities for organizations to optimize priorities and focus on strategic goals.
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