Research conducted by the NTSA in partnership with the Plan Sponsor Council of America (PSCA) that examined the participation and savings rates of public education employees in more than 4,400 school districts across the country revealed that the number one factor driving participation and savings rates in school districts is participant choice. An essential element in the broader array of provider choice is the breadth of education available through the expertise of financial advisors who educate, encourage and advise these workers on-site. Consider that:
- There is 25% greater participation in plans with 15 or more investment providers compared to plans with only one provider.
- On average, account balances are 73% higher among plans with 15 or more providers compared to single provider arrangements.
- There is a 203% increase in average contribution rates among plans providing access to 15 or more providers compared to plans with only one provider.
- Single-provider arrangements have the lowest participation rate: 8% below the national average.
Simply stated, the data reveals a positive and significant correlation between the number of choices/advisors and employee plan participation. As access to these quality resources increases, participation and savings increase too.
Editor’s Note: This is an occasional feature in the NTSA Advisor. This tip is taken from the 403(b) Plan Sponsor Guide, which is being made available to school districts nationally to assist them in understanding how to improve 403(b) plan participation and savings rates to help employees achieve a comfortable and timely retirement.
The 403(b) Plan Sponsor Guide is part of the content contained in the NTSA Certified Retirement Education Specialist (CRES) materials. The NTSA Certified Retirement Education Specialist (CRES) program and designation has been developed in order to equip advisors to be qualified and available to teach the NTSA educational program, which is designed to provide teachers with the basics of planning for retirement and improve their retirement readiness. More information about CRES is available here.
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