"I am personally surprised that the number is that high," said Jeri Savage, retirement lead strategist at MFS Investment Management, referring to the combined 45% of plan sponsors that indicated wanting to add some type of emergency savings feature. "It's wonderful if that bears itself out."
A healthy slice of plan sponsors is also looking to match student loan repayments, the second most popular optional provision under SECURE 2.0 Act.
More than 1 in 10 (16%) expect to make matching contributions for student loan payments, meaning participants not contributing to their retirement accounts will now be eligible for a match if they're paying back their student debt.
If plan sponsors were unconstrained by budgets and resources, however, they would more readily offer student loan matching than emergency savings vehicles, according to the MFS' outlook report.
The 16% planning to match student loan payments would jump to 57% were they not limited by budget or resource constraints.
Student loan matching is onerous to administer and has a cost associated with it, Savage said.
There's a cost for the employer not currently making matches for participants not contributing to their retirement accounts, she said.
Overall, plan sponsors were hugely troubled by the changing regulatory and legislative environment, rating it as the greatest issue that keeps them up at night. More than half (55%) said the changing regulatory and legislation landscape was among their three biggest worries, more so than litigation risk (44%), plan administration burdens (43%) and in-plan retirement income solutions (41%).
"It's hard to have a comprehensive plan design in place if the rules of the road are constantly changing," Savage said.
Apart from implementing mandatory and optional SECURE 2.0 provisions, plan sponsors are keeping their eye on the highly controversial Retirement Security Rule proposed by the Department of Labor in late 2023. The rule would update the definition of investment fiduciary advice.
"The onus is on the plan sponsors to evaluate their different service providers because their service providers are going to be impacted under the retirement security rule," Savage said, adding that the industry expects the rule to change the way that business is done if it is passed.
"I guess it's a little too early to speculate what the final rule will look like," she said.
The report is based on a survey of 141 plan sponsors conducted in September and October and includes information drawn from a survey of 1,000 U.S. adults conducted between March 22 and April 6.
