- If you’re looking for evidence that efforts to enhance participation in, and engagement with, defined contribution plans are registering, a recent study will satisfy that curiosity. In its 2015 Deloitte Defined Contribution Benchmarking Survey, Deloitte has some good news in that regard. The study also sheds some light on employers’ needs and objectives concerning their DC plans.
Participation is high — 75%, down only slightly from the 77% of 2013-14.
Deloitte found that taking advantage of the company match is the motivation behind participation among 35% of employees. Good thing it also reports that nearly all employers — 94% — provide some kind of match or profit-sharing contribution.
But that was not the top reason that employees participate. Deloitte says the top motivation is simply the desire to save for retirement.
Just over one-third of employers think the main explanation for nonparticipation is lack of awareness or understanding. A strong majority — 83% — are turning to general and multiple communications and education to inform and educate employees, and to increase their understanding.
Interestingly, a strong majority turn to non-electronic means of reaching employees that center on face time. Two-thirds use group meetings, and that figure is six percentage points higher than in 2013-14. And the top three methods by which employers communicate with employees to encourage saving and heighten awareness of financial readiness for retirement are:- individual meetings;
- group meetings; and
- targeted communications.
So it should come as no surprise that 69% say they are not interested in using social media to interact with their record keeper and 70% were unsure their employees would be or did not believe they would be.
Automatic enrollment is showing positive effects, with strong majorities reporting it helped increase participant awareness (64%), the average contribution rate (70%) and the plan participation rate (88%). And 62% provide step-up contributions, which are being taken advantage of by an increasing number of participants. Opt-outs, the report says, are declining.
There is a slight gap between median actual deferral percentages of non-highly compensated employees and highly compensated employees, registering at 5.9% and 7%, respectively.The most common default deferral percentage for automatic enrollment is 3%, as it was in 2013-14.
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