NEW YORK, June 19, 2015 /PRNewswire/ -- J.P. Morgan Asset
Management today released proprietary data from its second
comprehensive survey of plan sponsors. The resulting white paper,
"Aligning goals, improving outcomes: 2015 Defined Contribution Plan
Sponsor Survey Findings," reveals that although plan sponsors have
a strong and growing sense of responsibility for helping employees
achieve a financially secure retirement, several disconnects exist
between the goals they identify for their defined contribution (DC)
plans and how they evaluate success. The white paper also presents
actions plan sponsors can take to help employees reach retirement
with the income they will need.
Developed to better understand what drives retirement plan
decision making, the survey of more than 750 plan sponsors first
sought to identify the main disconnects between plan sponsor
intent and strategy. For example:
- 75% of plan sponsors consider helping ensure that
employees have a financially secure retirement to be a highly
important goal, up from 59% just two years ago
- Yet, the majority of plan sponsors still rank traditional
goals, such as retaining quality employees (83%) and
demonstrating a level of caring for them (80%), well above
helping employees to achieve outcome-related goals, such as
financial security (75%) or the ability to retire at their
targeted retirement age (66%)
- What's more, some criteria for measuring outcome-related goals
are not yet viewed as top priorities. The percentage of
participants with account balances on track to replace 80% of final
salary in retirement, while definitely growing in importance, is
only ranked very or extremely important by 53% of
respondents and remains last on the list of success criteria
"Misalignment still appears to exist between the retirement
outcomes plan sponsors want to help employees achieve and the
relative importance they assign to different plan goals and success
criteria," said Catherine Peterson,
Global Head of Insights Programs at J.P. Morgan Asset Management.
"While many plan sponsors have taken steps to strengthen their
plans, our data shows there is still room for improvement. We
believe these disconnects present a clear opportunity for plan
decision-makers to help participants meet their retirement
goals."
To more closely align intent and outcome, the white paper
identifies three actions plan sponsors can take to help ensure
participants are able to retire with adequate income: 1) Adopt
automatic enrollment to encourage employees to save; 2) Adopt
automatic contribution escalation to encourage employees to save
enough; and 3) Adopt solutions and strategies like target date
funds and re-enrollment to encourage employees to invest
appropriately. The paper takes a closer look at re-enrollment,
specifically the strategy with the most room for improvement in
adoption, to understand what's preventing plan sponsors from
implementing the strategy. In fact, results showed that, to date,
only 7% of plan sponsors have conducted a re-enrollment.
When asked why they have not conducted a re-enrollment, several
misperceptions and the opportunity for further education were
revealed:
- 28% of plan sponsors have considered it but are
comfortable with their plan's overall asset allocation (yet
53% are not confident in their participant's overall asset
allocation)
- 12% of plan sponsors have considered it but believe
re-enrollment is too risky from a fiduciary perspective (not
surprising given 53% of respondents are not aware of the potential
to receive fiduciary protection for conducting a
re-enrollment)
What's holding plan sponsors back from doing more? It could be
the strong focus on participant choice versus plan sponsor
direction. Less than half (44%) of respondents describe
their philosophy on driving participant decisions as proactively
placing participants on a strong savings and investing path.
"We hear from plan sponsors every day that they encourage
participants to save and invest wisely. But, the reality is
participants just aren't doing it themselves. Plan sponsors have an
opportunity to set participants up for a higher likelihood of
success by implementing strategies that proactively place
participants on the right path," said Anne
Lester, Global Head of Retirement Solutions and 2014
Morningstar U.S. Fund Manager of the Year for the JPMorgan
SmartRetirement suite of target date funds. "To be successful, plan
sponsors need to select a plan design and investment strategy that
can help move the needle and ensure participants get across the
finish line with enough saved for retirement."
Enabling plans to fulfill their crucial role in providing
retirement security requires further evolution and a concerted
effort from all parties involved:
- Participants need to save more and be more engaged in planning
for retirement
- Employers should strengthen plans while continuing to meet
responsibilities as business leaders and fiduciaries
- Plan Providers and advisors need to be the proactive partners
that plan sponsors rely on for innovative ideas and industry best
practices
- Policymakers should motivate individuals to save and invest and
help employers shoulder the fiduciary responsibility
To access the full white paper and to explore the findings by
plan size and theme, visit our new interactive website at
jpmorgan.com/dcresearch.
Methodology
J.P. Morgan Asset Management conducted an
online survey of 756 plan sponsors was conducted in January 2015 with Mathew
Greenwald & Associates, a market research firm based in
Washington, D.C.
Each respondent was a key decision maker with respect to their
organization's DC plan. All companies represented have been in
business for at least three years, offer a 401(k) or 403(b) plan to
their domestic U.S. employees and have at least 10 full-time
employees.
Below are breakdowns of our sample of plan sponsors, both by
plan assets and by organizational role. Results aggregated across
plan size categories were weighted to reflect the size distribution
of plans in the U.S. DC plan universe.
About J.P. Morgan Asset Management
J.P. Morgan Asset
Management, with assets under management of $1.6 trillion, is a global leader in investment
management. J.P. Morgan Asset Management's clients include
institutions, retail investors and high net worth individuals in
every major market throughout the world. J.P. Morgan Asset
Management offers global investment management in equities, fixed
income, real estate, hedge funds, private equity and
liquidity. JPMorgan Chase & Co. (NYSE: JPM), the parent
company of J.P. Morgan Asset Management, is a leading global asset
management firm with assets of approximately $2.4 trillion and operations in more than 60
countries. Information about JPMorgan Chase & Co. is
available at www.jpmorganchase.com.
J.P. Morgan Asset Management is a leading provider of
comprehensive retirement solutions and is dedicated to improving
individual retirement outcomes. The firm has defined
contribution assets under management of nearly $146 billion, as of March
31, 2015.
J.P. Morgan Asset Management is the marketing name for the asset
management businesses of JPMorgan Chase & Co. and its
affiliates worldwide.
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SOURCE J.P. Morgan Asset Management