More employers are enhancing their retirement plan to compete for new employees — and keep the ones they have
Increasingly, plan sponsors are refreshing their workplace retirement plans to give employees both the opportunity to save more for retirement and the flexibility to use both their personal and employer contributions in innovative ways to manage their financial needs. This trend comes as employers increasingly look to boost their employees’ retirement security and financial well-being, according to findings in the 2022 Next Evolution of DC Plans Survey1 from Willis Towers Watson.
The survey results show that more than one in four respondents (28%) expect to make changes to their plans’ automatic deferral features, whereas four in 10 plan sponsors (38%) expect to adopt an innovative contribution strategy. These strategies include allowing participants to use their contributions to reduce student loan debt or directing contributions to an emergency savings fund or a health savings account.
Using the Retirement Plan As a Key Attraction and Retention Tool
More than half of the survey respondents (55%) expect to have attraction and retention issues over the next two years, with one-third (36%) of those considering their retirement plan as an important tool to attract and retain employees. Significant gaps in priorities are expected over the next two years between sponsors that connect their plan with attraction and retention and those who do not. Those that do are focusing on using their defined contribution (DC) plan to enhance employee engagement for retention, raise the importance of attracting new talent and align diversity, equity and inclusion goals.
According to the survey, 75% of employers plan to enhance their defined contribution retirement plan offerings to better support the financial needs of their current employees and remain competitive to potential recruits. Eighty-two percent of employers plan to focus on changing and enhancing the employee experience when engaging with their retirement plans. Almost all employers plan to offer personalized one-on-one support, and 91% plan to boost their digital tools to help employees with budgeting and spending.
The 2022 Next Evolution of DC Plans Survey was conducted during January and February 2022. A total of 363 U.S. employers that sponsor a DC plan participated in the survey. Respondents employ 8.4 million employees and represent a broad range of industries.
[SIDEBAR]
The “Great Job Switch?”
According to the Bureau of Labor statistics, while 4.4 million workers decided to leave their jobs in February 2022, about 6.7 million people were hired during that same time. Many industry analysts believe it’s more appropriate to call this trend “The Great Job Switch” instead of “The Great Resignation.”
1 https://www.napa-net.org/sites/napa-net.org/files/DC Pulse Survey Results_WTW_0322.pdf