The majority of U.S.-based defined contribution pension plan sponsors said they haven’t felt the need to pause or reduce contributions during the coronavirus pandemic, according to a new survey by the Defined Contribution Institutional Investment Association.

While 86 per cent of respondents said they aren’t considering suspending matching employer contributions, just eight per cent said they already have. Meanwhile, 92 per cent said they aren’t considering reducing those contributions, with just three per cent saying they’ve done so.

No plan sponsors said they’ve reduced or suspended non-matching employer contributions, with only a few (eight per cent and six per cent, respectively) considering either option.

Read: Could coronavirus delay DC plan members’ expected retirements?

A small amount (13 per cent) of plan sponsors said they’ve laid off employees as a measure to deal with the impacts of the pandemic, while the same amount said they’ve actually increased hiring in certain departments. Half (50 per cent) said they’ve implemented a company-wide hiring freeze and 38 per cent said they’ve reduced workers’ hours in specific departments.

As far as plan member activity around investments, the survey also found 12 per cent of plan sponsors said they’ve observed a decrease in allocations to equity. Ten per cent saw changes among members with self-directed investments, eight per cent saw members seek loans or withdrawals, seven per cent saw members stop contributing and six per cent had members who cashed out. For plan sponsors with members invested in target-date funds or with managed accounts, seven per cent saw members make changes to their allocations.

Read: Canadians reducing retirement savings due to coronavirus

In communicating with members, 43 per cent of plan sponsors said they’ve sent messaging around reassessing risk tolerance, 31 per cent on rebalancing portfolios to align with original allocation goals, 23 per cent on increasing or creating an emergency fund and 17 per cent said they suggested that members avoid checking their retirement account balances too frequently.

The survey also found six per cent of plan sponsors said they’re considering introducing additional guaranteed income investment products to their lineups and three per cent said so of real assets as an added diversifier with managed accounts.

In terms of how the pandemic is shifting plan sponsor priorities, 22 per cent said helping plan members with emergency savings will be a higher priority going forward and 13 per cent said education on budgeting and basic financial wellness will take higher priority.

Read: Navigating pension fiduciary duties during coronavirus pandemic

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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