Cybersecurity, Preventing Plan Leakage Top of Mind for Sponsors

Preventing asset leakage and cybersecurity concerns have been priorities for plan sponsors, according to new research from Callan, and many plan sponsors expect to act further this year.

The Callan 2022 Defined Contribution Trends Survey shows that 86% of plan sponsors have taken steps to prevent plan leakage, including offering partial distributions (66%) and installment payments (57%) and encouraging rollovers into the plan (56%). “Slightly fewer than half of survey respondents [46%] allowed terminated participants to continue repaying their DC plan loans,” the paper states.

And 30% of plan sponsors actively sought to retain terminated retiree assets, with 20% that made fund lineups more attractive to terminated participants and retirees.

Only 20% of plan sponsors expect to advance efforts by taking additional measures this year, Callan finds.

For plan sponsors that plan to act this year, the top measure expected is to review recordkeeper calls to monitor selling of IRA rollovers (7%), followed by planning to make the fund lineup more attractive to terminated participants and retirees (6%). Additional steps include offering annuities (4%), restructuring loan provisions (3%), and offering partial distributions (3%), the survey shows. 

This year, 1% of plan sponsors expect to offer installment payments; encourage rollovers from other qualified plans; allow terminated and retired participants to continue paying off loans; and actively seek to retain terminated retiree assets, Callan finds.

“In 2020 and 2021, DC plan sponsors were largely focused on reviewing plan fees, their investment policy statement (IPS), and the plan’s investment structure,” the paper states. “These were all top areas in 2021 and will be areas of focus in 2022 as well.”

With regards to plan sponsors’ fiduciary initiatives, cybersecurity is a top concern for plan sponsors, with 41% reporting that assessing security protocol was a priority in 2021. This year, 31% expect to act to review security protocols and perform an audit.   

The Callan survey included responses from 101 plan sponsors, with 80% of respondents from corporate plans; 90% offered a 401(k) as the primary DC plan and 74% had more than $1 billion in assets.