An American Century Investments® survey of pre-retirees shows that participants value the defined contribution (DC) plan but want more advice on how to prepare for retirement.
DC Plans Get Passing Grades, but Have Room to Improve
The grades are in and there’s generally good news for DC plan sponsors. An American Century Investments survey shows that pre-retirees are generally happy with their retirement plans, but see opportunities for improvement.
Participants Value the Retirement Plan
We surveyed plan participants between the ages of 55 and 65 to learn more about their perceptions and experiences in preparing for retirement. We found that participants appreciate the availability of the DC plan and the ability to save through a plan at work. More than 88% gave their employers a C or higher.
We dug a little deeper to see if there were certain aspects of DC plans that participants like the most. Again, we saw high ratings on the overall benefit of the plan, especially when it comes to having a good range of investment options and managed solutions.
Participants Want More Retirement Education
Unfortunately, scores dropped significantly when we asked about communication support. The average score was a C+, and 18% of participants gave their employers a D or an F. This aspect of the survey is a bit surprising. Plan sponsors and providers already invest a lot of time and resources in education, but 75% of those surveyed said they want more.
With less than half of participants giving their employer an above average grade for education, a change in tactics may be in order. Specifically, participants say they’d like to see more educational programs such as seminars and webinars on both accumulating assets and preparing for the transition to retirement. This may mean replacing or supplementing brochures and online tools with in-person events. The respondents to our survey like this idea, and more than half said attendance at such meetings should be mandatory for all employees.
Make a Good Thing Better
Our DC plan grade card delivered mixed news for plan sponsors. Certainly, it’s gratifying to know that employees place a high value on the DC plan. Though the grades for education are disappointing, they are enlightening. With some tactical adjustments, there’s an opportunity to take a highly valued employee benefit and make it even better.
The opinions expressed are those of Diane Gallagher and are no guarantee of the future performance of any American Century Investments® portfolio. This information is not intended to serve as investment advice; it is for educational purposes only.