Preparing For 2026: What Plan Sponsors Need to Know

As 2026 approaches, plan sponsors are facing an inflection point. Between evolving workforce expectations, mounting cost pressures, and a shifting regulatory landscape, plan sponsors must take a fresh look at how they structure, communicate, and manage their defined contribution (DC) plans. The coming year is an opportunity to deliver greater value to employees, while continuing to find ways to best manage compliance and fiduciary risk.

Here are five key points that plan sponsors should keep front and center:

1. Financial Wellness Programs Are No Longer Optional — They’re Essential

A published survey of plan sponsors by Mercer finds that “financial wellness” is the top priority for many sponsors heading into 2026. Roughly 39% of respondents named expanding financial-wellness efforts as their top focus.

Plan sponsors increasingly recognize that making a retirement plan available is only half the battle. Employees often lack the financial literacy or confidence to make meaningful contributions or understand retirement readiness implications. According to the Mercer survey, about 6 in 10 sponsors say helping employees reach their financial and retirement goals is the primary objective of their wellness programs.

For plan sponsors, this means 2026 should be the year to:

• Audit and strengthen your financial-wellness offerings (education, digital tools, and advice solutions such as managed accounts).
• Increase communications — not just at enrollment, but on an ongoing basis — to reinforce the value of saving and managing debt, budgeting, and long-term retirement readiness.
• Consider expanding access to financial advice or counseling, especially as many participants may approach retirement with low savings or poor debt-management habits.

A strong wellness strategy can boost participation, reduce turnover, and strengthen the overall value of your benefits package.

2. Retirement Plans are Seen as a Prerequisite Benefit — and Part of a Talent Management Strategy

A study from Vestwell argues that access to a retirement plan is increasingly regarded by employees not as a “perk,” but a prerequisite to employment. That means plan sponsors must treat retirement plans as a core component of their total compensation and talent-management strategy. If your plan is sub-par — with high fees, limited investment choices, lacking financial wellness tools or education — it may likely undermine recruitment and retention efforts.

For this reason, many employers are already looking beyond the retirement plan itself to broader benefits — like healthcare, flexible work arrangements, and wellness resources — to remain competitive. In practical terms, plan sponsors should treat their DC plan not as a “nice-to-have” but a strategic asset that helps attract and retain employees.

3. Compliance and Cost Control Demands are Ramping Up

The same Mercer survey shows that many sponsors also name “regulatory compliance” and “cost reduction” among their top three priorities for 2026. On the compliance front, plan sponsors need to stay on top of evolving regulatory expectations and documentation requirements — especially as agencies continue to scrutinize fees, fiduciary oversight, and participant outcomes. Recent press coverage notes a growing number of lawsuits targeting excessive 401(k) fees or alleged misuse or handling of forfeitures—plan assets that revert to the plan when a participant terminates employment before becoming fully vested.

On the cost side, many sponsors report plans to take action. More than half of those surveyed said they are considering design changes — including adjustments to vesting schedules or automatic-enrollment/default contribution features — to rein in expenses.

The survey also highlighted increasing interest in PEPs and multiple-employer plans (MEPs), which offer a more comprehensive outsourcing solution by consolidating fiduciary and administrative responsibilities under a single pooled plan provider. The shift reflects a heightened desire among sponsors to provide competitive financial wellness benefits to their employees in a cost-effective manner.

Plan sponsors should consider doing the following to help support cost control and manage compliance:

• Review plan fee structures, benchmarking them carefully against comparable plans.
• Evaluate whether your plan design — vesting schedule, auto-enrollment, employer match or nonelective contributions — still makes sense in a tighter budget environment.
• Document fiduciary oversight and decision processes to protect against future liability.

4. The Future May Demand More Focus on Retirement Income

Historically, DC plans have focused on accumulation: helping employees save and invest toward retirement. But growing concern over retirees outliving their savings — especially given longer lifespans and uncertainty over other retirement income sources like Social Security — is forcing a shift. Some thought leaders argue that DC plans will need to evolve into more comprehensive retirement security systems.

For some sponsors, that means evaluating options such as guaranteed income or annuity features, “in-plan lifetime income” products, or other mechanisms to give participants more than just a balance at retirement. Even if you don’t go that route immediately, 2026 is a good time to:

• Begin assessing employee interest in lifetime-income solutions or guaranteed payout options.
• Work with your plan advisor to stress-test your plan against a “retirement-income” scenario — not just accumulation — to identify gaps in participant readiness.
• Have conversations with your plan advisor, recordkeeper or other service providers about potential future plan enhancements around retirement-income.

5. If You Haven’t Reviewed Your Overall Benefits Package — Now is the Time

Recent data from 2025 suggests that offering a robust benefits package — not just retirement savings — helps employers retain employees. That means retirement plans don’t exist in a vacuum. As part of your 2026 planning, consider how health benefits, wellness programs, student loan support programs, and other benefits integrate with your retirement plan offering. In short, think of your retirement plan as one piece of a broader total-rewards framework.

Final Thoughts

2026 is shaping up to be a turning point for DC plan sponsors. With growing emphasis on financial wellness, heightened cost and compliance pressures, and increased demand for retirement-income security, sponsors who stay passive risk falling behind. On the other hand, those who proactively refresh their plan design, communication, and long-term strategy can build a benefits package that not only attracts and retains employees — but also delivers real retirement value and reduces fiduciary risk.