While the majority (87 per cent) of defined contribution pension plan sponsors feel their members are somewhat or very prepared for retirement, only 63 per cent of members feel the same way, according to a new survey by Voya Investment Management.
The survey, which polled 305 U.S. DC plan sponsors, 205 plan specialists and 500 Americans who are actively contributing to their employer-sponsored retirement plan, found plan sponsors’ top concerns include ensuring their plans comply with new regulations and their members are properly invested. Most respondents were also concerned about reducing plan fees and expenses.
Turning to the impact of markets, more than half of plan members said inflation and the state of the economy will have a severe or major impact on their ability to save for retirement, while the coronavirus pandemic was much less frequently cited as an obstacle to retirement savings. Indeed, more than a third (37 per cent) of plan members aged 50 and older said they’re now planning to retire later due to the long-term effects of market volatility, inflation and the pandemic.
The survey also asked plan sponsors for their views on the top long-term effects of recent market volatility, rising inflation and the pandemic on retirement plans, with many citing an increase in plan member investment changes and higher demand for emergency savings options.
“Inflation and continued market fluctuations remain a concern for many Americans particularly for those nearing retirement,” said Brian Houston, senior vice-president and business development manager at Voya Investment Management, in a press release. “As a result, it’s become clear there is a disconnect between employers and their employees surrounding retirement readiness.
“Specialists and employers can consider these findings an opportunity to bring forward more retirement readiness support solutions, such as offering an expanded investment menu for workers nearing retirement that includes additional fixed income options, lower volatility equity options and other strategies, such as managed accounts, to help employees on their path for a more secure financial future.”
The survey found nearly 90 per cent of plan members said they’re somewhat or very interested in retirement income solutions, as well as an investment option, that provides income during retirement (87 per cent) and helps them to understand how to generate income in retirement so they can maintain their current lifestyle (87 per cent).
In addition, the majority (82 per cent) of plan members said they trust the retirement planning services offered by their employer and are confident the retirement savings plan offered through their workplace will help them achieve their retirement goals. Notably, 87 per cent were also more likely to stay with their employer if they offered competitive retirement planning services and products.