According to the “2013 Defined Contribution Plan Sponsor Survey Findings: Evolving Toward Greater Retirement Security” from J.P. Morgan Asset Management, the most frequent reason given by plan sponsors for not implementing a combination of automatic enrollment and automatic escalation as plan features is “concern that employees would be upset, presumably due to a perceived loss of some control over their finances.” However, data from a related participant survey showed that more than 60% of plan participants are either in favor or neutral to such automatic features, and that less than 20% disapprove of such features.

The survey also found more than 50% of respondents “do not entirely understand that, as plan sponsors, they can potentially receive fiduciary protection for participant assets that are defaulted into their plan’s QDIA (qualified default investment alternative) during a re-enrollment.”

Other findings included:

• Eighty-three percent of plan sponsors said “demonstrating a level of caring about employees” and “helping to retain them” were among their top goals. In addition, nearly 60% said they felt a “somewhat high” to “very high” sense of responsibility for employees’ overall financial wellness.
• While 73% of plan sponsors rate themselves as highly effective in demonstrating a level of caring about employees, only 55% rate themselves as effective in helping ensure employees have a financially secure retirement. However, sponsors of larger plans feel they are highly effective in achieving retirement outcome goals (70%). These plans are also more eager to adopt plan features such as automatic enrollment, automatic escalation, target-date funds and one-time re-enrollment into their QDIAs.
• Each component of a plan needs to be coordinated and managed toward a common set of goals. This includes plan design, investment options, communications and administration. For example, more than 70% of plan sponsors said it is important to work with a plan provider that focuses on participant outcomes or suggests new ideas for achieving plan goals, but only 10% said they work with a provider that does so.

The implications of these findings, according to J.P. Morgan, are that plan sponsors need to partner more closely with plan providers to meet participant needs. This also presents an opportunity for providers, advisers and consultants to bring a more proactive, progressive and strategic level of service to plan sponsors. Together, this teamwork is capable of “strengthening DC plans and providing employees with the satisfying and secure retirements they desire,” the survey report said.

On behalf of J.P. Morgan, Mathew Greenwald & Associates conducted an online survey of 796 plan sponsors between December 18, 2012 and January 25, 2013. Each respondent was a key decisionmaker with respect to the organization’s DC plan. All companies represented have been in business for at least three years, offer a 401(k) or 403(b) plan to their U.S. employees and have at least 10 full-time employees.

The survey report can be downloaded from here.