While most plan sponsors are supportive of the SECURE 2.0 Act, some do not yet have a plan in place to implement its provisions, with many not knowing which are mandatory and which are optional, according to a new report from UBS released May 22.
One-third of plan sponsors have no implementation plans, with 7% reporting not knowing “where to begin.” Among small sponsors managing plans with less than $25 million in assets, the level of unpreparedness is especially high, with 56% not having plans in place to implement the measures.
“There’s still a learning curve for many plan sponsors, particularly those responsible for small plans. With 90-plus provisions, SECURE 2.0 has some of the most sweeping changes we’ve seen in the industry,” said Mike Griffin, head of distribution and institutional client engagement at UBS' workplace wealth solutions group.
Many plan sponsors reported not being familiar with the provisions of the legislation. Less than half (48%), for example, are highly familiar with the timeline for when each provision will go into effect. Even less, 44%, are familiar with which measures are mandatory and which are optional.
Awareness of tax credits available to small businesses under SECURE 2.0 was also low, with only 33% of small plan sponsors reporting high familiarity with the provisions.
Plan sponsors are looking for help. The majority (80%) are highly interested in getting guidance on how to implement the measures, with 56% looking to change retirement plan consultants in the next six to 12 months. Two-thirds of plan sponsors cited having a provider knowledgeable in SECURE 2.0 provisions as a reason for switching.
The report also found that SECURE 2.0 is prompting many employers to start offering retirement plans. More than half (56%) of business owners not offering workplace plans reported being more likely to offer a plan as a result of the legislation.
Helping employees save for retirement was the most prevalent reason for wanting to offer a retirement plan, cited by 66% of business owners. Another top reason was a desire to attract and retain talent (57%).
The report surveyed 1,200 senior-level executives and business owners responsible for overseeing their organizations’ employer-sponsored retirement plans. The survey, which was conducted Jan. 9 -15, included 300 business owners who do not currently offer workplace plans.