Given the opportunity, a majority of defined contribution plan executives said they probably would discontinue their plans if a state DC plan were made available, a recent survey by the LIMRA Secure Retirement Institute found.
Thirty-two percent said they would "very likely" discontinue their company's DC plan and enroll employees in a state-sponsored plan. Another 28% said it was "somewhat likely" they would drop their plans.
The results were almost the same as a similar survey in 2016, in which 30% said they would be "very likely" and 25% said they would be "somewhat likely" to act, said Deborah Dupont, associate managing director of institutional retirement research for the institute. That first survey "really surprised us."
In the latest survey, LIMRA also asked DC plan executives what would happen to participation if a state DC plan was substituted for their current plan. Thirty-two percent said participation would increase, while 37% said the participation rate would stay the same. Sixteen percent were unsure, and 15% said the rate would decrease.
Ms. Dupont said these results suggest that higher anticipated participation rates would be due to a state-run plan requiring automatic enrollment — with participants allowed to opt out — whereas some existing DC plans lack auto enrollment, an important plan design in driving higher participation rates.
The survey was based on a random nationwide sample of 571 DC plan executives, most of whom worked at 401(k) plans. Thirty-five percent of respondents were from plans with fewer than 100 participants and 43% were from plans with 100 to 999 participants. Twenty-two percent represented larger plans.