Data and Research September 9, 2021

Study Finds Advantages in Working With a Sole Recordkeeper

The research highlights ways sponsors of multiple retirement plans can benefit from working with just one provider.

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As some employers with multiple retirement plans are choosing to work with a single recordkeeper for all their plans, new research from Principal finds most plan sponsors believe they’d save time on retirement plan administration by working with one recordkeeper instead of several. And, in reality, using one recordkeeper for multiple retirement plans can be an “efficiency game changer,” the firm says.

The survey, which included more than 300 plan sponsors and was conducted by NMG Consulting on behalf of Principal, finds employers that worked with one recordkeeper on several retirement plans had potentially significant time savings, features and services that made plan administration easier.

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With a single recordkeeper, plan sponsors said they spent less time on plan administration and still have access to the plan features and expertise they typically need. More than three-quarters of plan sponsors said they could reduce the time spent on their retirement plans by working with a single recordkeeper. Depending on the type of plan, sponsors with multiple recordkeepers reduced the time they spent on their plan by 17% if they switched to a sole recordkeeper. Hourly time savings from using one recordkeeper translated to as many as 14 business days over the course of a year, Principal says.

Additionally, sponsors with one recordkeeper reported increased employee satisfaction and higher engagement, and many said they believed their employees have a better understanding of retirement benefits. Among employers working with a single recordkeeper, 73% reported their employees are better engaged with all their retirement benefits, while 62% of those working with multiple recordkeepers said the same.

Compared with plan sponsors with multiple recordkeepers, the Principal research found those with a single recordkeeper are slightly more likely to say their experience across plans is consistent (93% vs. 88%), plan compliance non-discrimination testing and Form 5500 filing are efficient (93% vs. 89%), and that they have access to integrated reporting on plan performance metrics (86% vs. 80%).

Principal also found that sponsors working with multiple recordkeepers report their plans have complex or specialized plan design provisions that require the expertise of a specialist recordkeeper and subject matter experts. In fact, sponsors that work with multiple providers reported this is one of their biggest concerns when working with a single recordkeeper. However, this fear might be misplaced, as the survey determined those that work with one recordkeeper reported access to those same capabilities.

Employers also say they appreciate the ease of having one point of contact to evaluate overall retirement plan strategy, measure how well the plan is working and make suggestions for plan improvements. Among plan sponsors that don’t have a single, strategic point of contact, 69% said they would value that form of communication.

Data and Research September 8, 2021

Working Past Age 65 May Seem Like a Great Idea …

… but the prospects may vary, based on education, race and gender, says CRR.

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Employees behind on their retirement saving may plan to fix this by continuing to work past retirement age. But is that plan realistic? The Center for Retirement Research at Boston College (CRR) says maybe not. At least not for less-educated groups—ironically, those who tend to earn the least and could use extra work years the most.

For that reason, CRR says, in its research paper “Are Older Workers Capable of Working Longer?” any plans policymakers may have to further push back Social Security’s eligibility age thresholds would be ill-advised.

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New trends have emerged, the paper said, such as deteriorating health status—notably, more obesity and less activity—and rising incarceration rates among less-educated individuals, often Black individuals who are aging in prison. It noted additional factors that influenced its findings, such as the Great Recession and subsequent recovery, growing inequity and increased “deaths of despair”—many from opioid overdoses among less-educated middle-aged workers.

So it aimed to determine “how long will people be able to work, and how does that vary by education, race and gender?” Drawing data from the National Vital Statistics System (NVSS), the American Community Survey (ACS) and National Health Interview Survey (NHIS)—as to deaths, disabling physical, emotional or mental health issues, and institutionalization in a prison or nursing home—it calculated working life expectancy at 50 for men, women, non-Hispanic white individuals and Black individuals, plus segmented them for high or low education.

The results show, for starters, that the conditions statistically fostering working past retirement age ended in 2010. The basis had been working life expectancy—in practice, disability-free life expectancy, which enabled a person to work—increasing alongside life expectancy. Since then, while life expectancy has continued to grow, albeit at about half the pace of from 2000 through 2006, work life expectancy has not kept up—“such that every year of life expectancy gained is associated with only about a half year of work capacity.” 

The gap is especially apparent when it comes to less-educated white and Black men. CRR predicts that 26% of “low-education” white men will be unable to work to 67, their full retirement age (FRA). It’s worse for the average Black man, who will experience “a step back in retirement security,” CRR said, as he can’t expect to work past age 63 yet will live longer. Specifically, CRR found, of the Black men who can work at 62, 10% will be unable to work at 64, and 51% will need to stop short of their FRA.

Low-education Black women, on the other hand, fare better, the study showed, than men—about 62% will be able to work to age 67 to claim Social Security. Of highly educated Black men and women, 59% and 72%, respectively, should be able to work into their 70s, CRR found.

The report statistics are good news for well-educated white and Black employees who would like to keep working—and saving—as long as possible.

The report’s authors, Laura D. Quinby and Gal Wettstein, senior research economists at CRR, point out that most earlier health studies used to measure ability to keep working considered only “extreme forms of functional limitation,” whereas the CRR study goes well beyond this, counting any “physical, mental or emotional problem that keeps you from working” in its statistics.

This also could suggest that the post-2010 trend, which failed to account for potentially many who had retired due to lesser disabilities, may not have been as pronounced as it appeared.

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