Data and Research July 19, 2022

Employees Want More Help With Retirement From Employers, WTW Survey Says

Nearly three-quarters of employees with an employer-sponsored DC plan rely on it as their primary retirement savings vehicle.

Reported by

Nearly three out of four respondents with an employer-sponsored retirement plan, or 73%, said their employer’s retirement plan is the primary vehicle they use to save for retirement, according to new research from the 2022 Global Benefits Attitudes Survey by WTW, released Tuesday.

Among those respondents, 69% said their retirement plan meets their needs; however, many employees would like more help from their employers. In fact, 44% of all employees ranked retirement in the top three issues they most want their employers to focus on.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“Employees want help with saving for retirement. So, it’s imperative for employers to ensure their Total Rewards programs provide not only benefits that meet employees’ needs but also the employee engagement resources, tools and technology to make informed decisions about saving for retirement. When their financial wellbeing is strong, employees are more likely to be engaged and productive and less likely to leave their organization,” said Jennifer DeMeo, managing director of integrated and global solutions at WTW, in a statement.

Overall, 69% of U.S. employees surveyed recognize they are not saving enough for retirement, according to the survey of more than 9,600 U.S. employees. Additionally, people closer to retirement are more likely than before the COVID-19 pandemic to say they will retire beyond the age of 70.

The WTW survey found that the top three reasons employees cited for not saving more for retirement were paying off debts (36%); saving money for other reasons, such as holidays, purchasing a car or paying for education (28%); and not being able to afford to save more (27%). More than half of respondents (52%) reported facing key risks to their retirement security. Those risks include saving less than 5% of their salary despite wanting to save more, borrowing from their 401(k) plan and withdrawing funds from their retirement plans.

Additionally, three in 10 respondents (29%) reported expecting to work past age 70 or never retire, which is similar to the pre-pandemic survey results from 2019. However, while just one in four younger workers now plan to retire at age 70 or later, or never retire, the number of workers age 50 and over who plan to do so has risen to 36% compared with 30% in 2019. This suggests the pandemic has changed the way different ages set retirement expectations.

“Saving enough money to retire comfortably while meeting current financial needs remains a significant challenge for a majority of workers,” said Mark Smrecek, senior director, retirement at WTW, in a statement about the survey.

The 2022 Global Benefits Attitudes Survey was conducted online and collected 35,549 responses in 23 markets worldwide during December 2021 and January 2022. Respondents include 9,658 U.S. employees from large and midsize private employers, representing a broad range of industries, according to information from WTW.

Compliance July 18, 2022

Dismissal Motions Rejected in UMMS ERISA Lawsuit

The defendants contest their process ensures that any fees paid by participants are reasonable and all services and investment offerings are in the best interests of the participants.

Reported by

The U.S. District Court for the District of Maryland has issued an order in an Employee Retirement Income Security Act lawsuit filed on behalf of participants in the University of Maryland Medical System 401(a) Defined Contribution Plan and UMMS Voluntary 403(b) Plan.

The order rejects the defendants’ motion to dismiss the lawsuit, setting the stage for discovery and a potential full trial or settlement.

Get more!  Sign up for PLANSPONSOR newsletters.

The defendants are accused of failing to ensure investment options in the plans were prudent in terms of performance and cost, failing to select prudent share classes, and not selecting similar investment options with lower fees, such as collective investment trusts or passive funds instead of actively managed ones. The lawsuit also takes issue with the plan’s use of Prudential’s GoalMaker asset allocation service, calling it “abusive.”

A statement issued to PLANADVISER from UMMS after the lawsuit’s filing says the medical system does not believe that there is “any merit” to the claims.

“UMMS, and/or its designated representatives, routinely monitors the various investment offerings and educational tools offered to its retirement plan participants,” the statement reads. “This process ensures that any fees paid by participants are reasonable and all services and investment offerings are in the best interests of the participants.”

The new court order stretches to 13 pages. It cites various case law and precedents to argue that a prospective plaintiff, to get beyond a motion to dismiss, must only show, through reasonable inferences from well-pleaded facts, that the fiduciary’s choices did not meet ERISA’s requirements.

“For a plaintiff relying on inferences from circumstantial allegations, this standard generally requires the plaintiff to allege facts, accepted as true, showing that a prudent fiduciary in like circumstances would have acted differently,” the order states. “Further, if the court, based on circumstantial factual allegations, may reasonably infer from what is alleged that the process was flawed, and that an adequate investigation would have revealed to a reasonable fiduciary that the investment at issue was improvident, a complaint will survive a motion to dismiss for failure to state a claim.”

The move by the court to allow the case to proceed comes at a busy time for ERISA litigation—a time some compliance experts see as a possible inflection point thanks to recent appellate and Supreme Court rulings. Beyond the emergence of potentially influential precedents, the pace of filings in 2022 has been extremely rapid, with at least 25 cases filed in the first four months of the year. One expert anticipates that anywhere from 75 to 100 cases will be filed by the end of 2022.

«