2024 MFS DC Plan Sponsor Survey: Sponsor Confidence

2024 MFS DC Plan Sponsor Survey: Sponsor Confidence

 

How confident are plan sponsors in their participants' retirement readiness? Jeri Savage and Kristen Colvin dive into the survey findings, revealing sponsor priorities, to concerns, and what’s keeping them up at night.

 

 

Kristen: In the 2024 MFS DC Plan Sponsor Survey, the first theme focuses on plan sponsor confidence. Jeri, as you think about the survey what are some of the takeaways related to plan sponsor confidence?

 

Jeri: Kristen, for the second year in a row, we ask plan sponsors about their overall confidence levels and concerns when it comes to their participants retiring. We ask about their areas of focus for the next 12 months and what’s keeping them up at night. We ask about competing financial priorities, litigation fears and new this year, we ask their thoughts on who should be responsible for certain actions when it comes to DC plans. Many of these questions we ask in our corresponding global retirement survey of plan participants, so it’s interesting to see where sponsors and participants are aligned, and where they might not be.

 

Kristen: And what would you highlight in terms of some of the key learnings around confidence?

 

Jeri: Similar to last year, we asked plan sponsors how confident are they that their plan participants will be able to retire at the age they want to. Only 18% answered that they were very or extremely confident in this ability. This number is lower than last year’s results and it’s also lower than what participants just told us. In our global retirement survey, 36% of participants are very or extremely confident they will be able to retire at the age they want to.

 

We see some distinctions by plan size and type. For example, 35% of plans that also have a DB offering are very/extremely confident versus just 6% of DC only plans. When it comes to plan size, only 5% of small plans and 7% of medium-sized plans are very or extremely confident versus 24% of large plans.

 

Furthermore, when we asked plan sponsors as an employer, how concerned are you about your participants’ probability of achieving an adequate and secure income in retirement, 75% say they are somewhat or very concerned – and again we see that number jump to 84% for those with only DC plans but fall to 65% for those who also offer a DB plan.

 

Kristen: So heightened level of concern, lower level of confidence.  What does that mean in terms how that’s shaping plans sponsor areas of focus or what’s keeping them up at night?

 

Jeri: When it comes to areas of focus over the next 12 months, 82% of sponsors tell us they are focused on reviewing SECURE 2.0 and adopting the appropriate provisions. This continues to be an area of focus across the board for all sponsors – small, medium and large. Second, 57% tell us they will be evaluating the investment lineup holistically. And then 43% tell us they are focusing on operational issues.

 

In terms of what’s keeping them up at night, the top three responses came in as:

 

1. The changing regulatory and legislative landscape at 71%
2. Litigation risk at 49%
3. And then overall plan administration burdens at 40%

 

We see some areas of differentiation when it comes to plan size – for example, smaller plans signal participation rates as a top three area of concern, while larger plan cite retirement income solutions in their top three. We see a similar differentiation by plan type. Sponsors with both DB and DC benefits follow the overall top three worries, but DC only plan sponsors list overall participation rates and savings rates in their top three as well.

 

Kristen: Really interesting to hear the differentiation between DB/DC combination and the impact on confidence and levels of concern.  Thank you so much for sharing those insights with us, really appreciate the preview.  To continue the discussion or to see the full results, please visit mfs.com.

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