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Practice Management

Benefits of Multiple 403(b) Providers

Q. Are there any benefits to having multiple 403(b) providers, as opposed to just one? 

A. In its study, “Improving Retirement Savings For America’s Public Educators,” regarding the effects of state pension funding gaps and benefits cuts in state retirement plan systems, the NTSA found there is greater participation in 403(b) plans in school districts that make multiple providers available; in addition, the ASPPA Pension Education and Research Foundation found that reducing the number of providers hurt participation rates based on case studies in four states. 

In “Benefits of Multiple 403(b) Providers: Having a Choice Positively Affects Participant Behaviors,”  Edward Kenney and Tali Yarmush of Equitable, with Equitable Research partner Zeldis Research Associates, also found that there are many benefits to making multiple 403(b) providers available to plan participants. Among them are the following:

  • Greater familiarity with the plan.
  • Deeper engagement. 
  • Greater confidence in the plan.
  • Higher satisfaction with the plan.
  • Higher annual contributions. And they cite NTSA’s finding that plans which provide access to 15 or more plan providers have average contribution rates 203% higher than plans that offer just one plan provider. 
  • Higher median account balances, which Kenney and Yarmush note the NTSA found as well.