Investment volatility, retirement benefit costs, regulatory compliance and retirement readiness are retirement plan executives’ top concerns now and over the next two years, said a survey released Wednesday by Willis Towers Watson.
More than half (53%) of U.S. defined benefit and defined contribution plan executives surveyed said investment volatility was a key concern today, followed by retirement benefit costs at 49%, regulatory compliance at 47% and employees’ retirement readiness at 39%. Looking ahead, 52% of all survey respondents cited investment volatility as a key concern for the next two years, followed by retirement benefit costs at 49%, regulatory compliance at 45% and workers’ retirement readiness at 44%.
Lisa Canafax, senior retirement consultant at Willis Towers Watson, said in a telephone interview that employers’ strong and growing concern over participants’ retirement readiness and financial well-being was notable. Employers and plan officials are recognizing the importance of having a plan that is not just compliant, but one that is able to help people retire, Ms. Canafax said.
The survey found that 58% of respondents with DC plans only said retirement readiness was their top concern, compared to 39% of all respondents, 25% of respondents with active DB and DC plans and 36% of respondents with a DC plan and inactive DB plan.
Executives of active and inactive DB plans said investment volatility and retirement benefit costs were greater concerns.
Other significant findings include:
- 31% of all respondents have been audited by the IRS or Department of Labor over the past two years, most commonly larger employers and open DB sponsors.
- Only 2% of respondents have faced fee and stock-drop lawsuits over the past two years.
- 44% of employers have not conducted operational compliance reviews of their DB plans in the past two years, and 42% have not conducted reviews of their DC plans; limited budgets and resources stand in the way of these reviews, respondents said.
- 33% of DB sponsors fully or partially outsource investment services compared to 26% of DC sponsors.
- Today, DC sponsors largely devote investment compliance resources to monitoring investment fees and money managers and will continue to do so over the next couple of years. However, DC sponsors also said they plan to dedicate more of those resources to monitoring participant behavior and benefit adequacy over the next two years.
- Today, DB sponsors devote most investment compliance resources to investment manager performance and asset allocation and will continue to focus on those areas over the next couple of years.
More than 300 U.S. retirement plan executives were surveyed in February and March.
The full survey report is available on Willis Towers Watson’s website.