DC plan sponsors taking more responsibility for employees’ retirement income

investmentnews.com:

Employers offering defined contribution plans to their workers are broadening their focus on financial wellbeing according to a poll from J.P. Morgan Asset Management.

DC plan sponsors are especially keen to ensure that their employees are well-placed to enjoy adequate retirement income with 9 out of 10 respondents saying they “strongly agree” or “somewhat agree” that it is important to offer investments that help participants generate income in retirement.

Six out of ten believe that DC plans should be a vehicle to generate retirement income and among those that do not currently offer this option 45% are considering doing so within the year. Those who do offer a retirement income option are more likely to say that their plan meets employees’ financial goals compared with those that do not.  

Generally, there has been a sharp increase in plan sponsors feeling a strong sense of responsibility for their employees’ financial wellbeing – 85% said so in 2023 compared to 59% a decade ago.

Apart from retirement income, more than 7 out of 10 respondents said they offer life insurance, 6 out of 10 offer disability insurance and mental health benefits, half make health savings accounts available, and just under half provide paid parental or caregiving leave.

Student loan debt assistance is offered by 40% of poll participants with a similar share offering one-off help such as debt coaching.

“It’s exciting to see that companies offering these types of programs see their retirement plans as more effective,” said Alexandra Nobile, VP of Retirement Insights at J.P. Morgan Asset Management. “The implications of SECURE 2.0 serve to only accelerate this trend and we expect to see more plan sponsors taking a proactive approach to evolving