The majority of large and mid-size U.S. employers that sponsor DC plans say retirement readiness has become a major issue for their employees.
Academic research in behavioural economics and psychology is changing how we understand our pension and benefit plan members’ decision-making process, and how we communicate with them. Popularized by the 2008 book Nudge: Improving decisions about health, wealth and happiness by Richard Thaler and Cass Sunstein, behavioural economics has been making huge advances—especially in the United Kingdom, where the Cabinet Office established a Behavioural Insights Team in 2010.
More than one-third of Americans that contribute to an employer-sponsored retirement plan have never increased the percentage of their salary they contribute to their company's plan, according to a survey.
One of the largest problems faced by group retirement plans is plan member apathy.
Fifty-five percent of retirement plan participants favour automatic annual increases to their contributions.
Among American DC plans automatically enrolling employees, the majority also automatically increase their contribution rate annually, setting up a growing number of employees for healthier retirement savings, according to a report.
The introduction of the National Employment Savings Trust in the United Kingdom has helped reverse a decline in pension membership, but an article notes that challenges still remain.
Plan sponsors see the benefits of automatic enrollment and continue to adopt it, according to Bank of America Merrill Lynch.
Pension plan sponsors can overcome the barriers to implementing auto features
There has been an increase in the number of American plan sponsors whose primary focus is on improving the retirement readiness of their participants, according to a survey.