What Will Retirement Plan Access, and Employer Benefits Look Like in 2026?

Retirement industry experts anticipate that by 2026, demand for retirement-plan and well-being benefits will grow, driven by workforce recruitment challenges and government retirement plan mandates for employers, according to new Transamerica research.

“Opportunities for growth abound over the next four years as the labor shortage continues and the demand for more generous and more flexible benefits and total rewards programs increases,” stated the conclusion of the “Transamerica Prescience Report: Expert opinions on employee financial well-being.” “Growing demand and government mandates will place particular pressure on smaller employers with fewer than 100 employees to offer retirement benefits.”

Regarding Retirement

The Transamerica report explored the future of employer-based retirement as a rough roadmap for the industry, stated Phil Eckman, president of workplace solutions at Transamerica, in a release published with the findings.

“In a fast-changing environment, retirement plan sponsors, providers, consultants and financial advisors need a sharp vision of the benefits that employees will need for their financial well-being several years from now,” Eckman said. “This data will help them select products, services, systems and processes that will meet the needs of employers and employees into the future.”

For retirement plan coverage, surveyed employers expect they will offer:

• Defined plan contribution plans for 88% of workers;
• Traditional defined benefit plans for 10% of workers; and
• Cash balance plans for 9.2% of workers.

Data from the American Association of Retired Persons show that 48% of U.S. private-sector workers aged 18 to 64—57 million people—do not have access to an employer-sponsored retirement plan. According to the AARP data, employers at small businesses are less likely to provide a retirement plan and that access differs substantially by race, ethnicity and gender.

Among registered voters age 25 and older, 96% said having a workplace retirement savings plan is important to helping them save for retirement, and 92% supported establishing a program to help workers save for retirement if their employer does not currently provide a retirement plan at work, according to AARP 2021 data presented in a blog post.

The polling result in Transamerica’s research is supported by Voya Financial research, published in November 2022. Voya data showed a retirement plan is as important for employee retention as a competitive salary and work arrangement, as 60% of workers are more likely to stay with their current employer if it sponsors a retirement plan.

Financial Well-Being Benefits

The Transamerica research found that experts anticipate a range of traditional and emerging benefits to become more common by 2026.

For financial well-being, experts projected that mortgage or rent assistance, credit improvement programs, student loan repayments and emergency savings funds will be offered by 40% to 60% of employers by the end of 2026.

Surveyed employers projected to offer the following financial well-being coverage by year-end 2026:

• Health savings accounts, paired with high-deductible health plans, for 69% of workers;
• Mortgage/rent assistance for 61% of workers;
• Credit improvement programs for 59% of employees;
• Critical illness insurance for 52% of workers;
• Emergency savings funds for 43% of employees;
• Work-from-anywhere available to 38% of employees;
• Gap insurance for 38% of employees;
• Executive health care coverage for 17% of workers; and
• Retiree medical coverage will apply to 13% of employees.

“The gap will widen between employers able to meet the demand for flexible total rewards programs and those who simply can’t,” the Transamerica report concluded. “In this context, it will behoove employers to select retirement, benefits, and [human capital management] partners who can facilitate the migration toward a more inclusive workforce.”

The Transamerica Prescient report is the first of a series summarizing tends in employee benefits and financial well-being. Researchers produced the report by asking 36 experts the survey’s 47 questions over a 12-month period in 2022 and 2023.