The percentage of 403(b) plan executives re-evaluating how plan expenses should be allocated surged to 26% last year from 16.8% in 2014, a report on 403(b) plan behavior said Thursday.
“It's hard to say, but certainly the increase in lawsuits, the focus on the fiduciary rule and the fee disclosure rules could be prompting sponsors to re-evaluate how expenses are allocated,” Hattie Greenan, director of research and communications for the Plan Sponsor Council of America, said in an interview. The PSCA collaborated with Principal Financial Group on the annual survey of 403(b) plans.
The report also said 19% of all plans offered auto enrollment last year, up from 16.2% in 2014. Auto enrollment was most frequently offered (30.8%) last year among plans with more than 1,000 participants.
Auto enrollment remains less popular in 403(b) plans than in 401(k) plans. “This is an area for further research,” Ms. Greenan said. “Some of the feedback we received from sponsors on a webinar a few years ago was that they didn't think it was their role to force their employees to do something. Larger organizations that have multiple payroll systems expressed concerns about the administrative logistics.”
The report also found that even though the percentage of plans allowing loans has remained essentially flat since 2009, the percentage of plans offering multiple loans rose to 47.4% last year from 36.8% in 2009.
“Loans have long been seen as a way of reassuring participants that their money is available to them in an emergency,” Ms. Greenan said. “Perhaps increasing the availability through allowing multiple loans is seen as a way of increasing participation and savings rates. Often plans that allow two loans specify that one must be for purchase of a primary residence or to avoid foreclosure.”
The annual 403(b) survey, based on a questionnaire sent to plans in the spring, contained responses from 614 plan executives.