How Employer Support of Financial Wellness Has Grown Over the Past Decade
In 2013, the word “selfie” was added to the dictionary and became Oxford Dictionary’s “Word of the Year.” The world welcomed a new pope and royal baby, and President Barrack Obama was inaugurated for a second term. “Breaking Bad” and “Arrested Development” were among the most binged television shows, and Candy Crush became the most popular game on Facebook, with 46 million average monthly users.
It was also a year when plan sponsors began a current trend of doing more to help their employees achieve financial wellness and retirement security. According J.P. Morgan’s 2023 Defined Contribution Plan Sponsor Survey, 85% of plan sponsors currently feel a strong sense of responsibility for employee financial wellness, up from 59% in 2013. Employers have a sense of duty with regards to employees’ financial wellness that has continued to grow, with nearly nine out of 10 sponsors surveyed feeling a “very high” or “somewhat high” level of responsibility for their participants, up from 59% 10 years ago, the survey finds.
Plan sponsors with a financial wellness program more often see their retirement plans as effective in meeting key goals, compared with those without such a program.
In an increasingly tight labor market, employee benefits are top of mind, as more than 7 out of 10 respondents report offering employees life insurance, 6 out of 10 offer disability insurance and mental health benefits, half make health savings accounts (HSAs) available, and just under half provide paid parental or caregiving leave.
One quarter (25%) of surveyed sponsors offer student loan debt assistance, and 40% offer emergency savings benefits, one-on-one financial coaching and/or debt management assistance.
Re-enrollment Gaining in Popularity
Re-enrollment, which is an annual or one-time event which re-enrolls workers who previously opted out of a plan, has increased dramatically in recent years. In 2023, 55% of plan sponsors have considered re-enrollment, and more than a quarter (26%) have already conducted or are planning to conduct a re-enrollment in the next 18 months, up from 7% in 2019.
A More Proactive Approach With Plan Design and Investments
The research shows more proactive movement toward plan design features and investment income solutions, including: Forty-three percent of plans offer automatic contribution escalation in 2023, more than double the percentage that offered it (21%) in 2013.
9 out of 10 plan sponsors "strongly agree" or "somewhat agree" that it is important to offer investments that help participants generate income in retirement. For plans without a current retirement income option, close to half (45%) say that they are "extremely likely" or "very likely" to consider offering one in the upcoming year.
Three out of four surveyed sponsors reported feeling “extremely confident” or “very confident” that their participants have an appropriate asset allocation.
Target date fund (TDF) usage remains high as plan sponsors refine their investment menus. The research found that 6 in 10 plan sponsors offer a TDF in their DC plan, while 76% of sponsors with a QDIA say it is a series of TDFs.
More than half of plan sponsors have added or enhanced their employer contributions/matches in the past three years, and a quarter have added or enhanced their immediate vesting schedules.
Additional source: ABC News, “13 Unforgettable Things About The Year 2013” (December 19, 2013).
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