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Higher Education Retirement Plan Trends

Transamerica released a study on the Retirement Plans for Institutions of Higher Education - 2015. Below I’ve outlined some of the most interesting insights from the study: 

Participant Outcomes

As technology continues to evolve, 43% of providers are monitoring participants’ retirement readiness, a key metric for measuring plan success. Driven by a desire to improve participant knowledge and outcomes, 39% of plans are leveraging on-site participant educators. Additionally, automatic plan features, such as auto-enrollment and auto-escalation have continued to grow and in turn improve the retirement readiness of participants. 44% of higher education plans currently offer automatic enrollment and 27% are considering adding such features in 2016.

Vendor Relationships
67% of plans are using an exclusive vendor, with the remainder managing multiple vendors. Many times moving to an exclusive vendor coincides with a shift from individual contracts (still used by 40% of plans) towards a group contract (now used by 36%).

Investment Options

60% of plans utilize an investment policy statement to oversee the process for creating the participant investment menu. In selecting the QDIA, qualified default investment alternative, target date funds are continuing to increase in popularity, with 34% of plans choosing them. Only 29% of plans are currently offering participants access to a stable value fund.

Strategic Initiatives for the Future

Here’s what respondents are focusing on implementing in the next 24 months:

1. Improve employee education
2. Add Roth contributions
3. Add investment options
4. Reduce the number of plans offered
5. Offer financial planning


Utilizing a Consultant

Only 17% of plans currently use a consultant, but 38% are planning to hire one in the next year. Couple the impact that using a consultant has proven on participant outcomes with the increased scrutiny that the Department of Labor is placing on 403(b) plans, and it’s no wonder that many plan sponsors are turning to a consultant!

For a full copy of the study, please email lpetronio@walshins.com.

Lisa M. Petronio, RICP®
Vice President, Retirement Plan Solutions
lpetronio@walshins.com

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Walsh Duffield Companies is not affiliated with Kestra IS or Kestra AS.

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