Workplace retirement plan participants may be more open to plan reforms than 401(k) plan sponsors previously thought, a new study by Northern Trust shows.
Based on a survey of 1,000 current and former participants in U.S. 401(k) plans, the Northern Trust study finds that significant numbers of workers and retirees would be inclined to agree with changes that plan sponsors and consultants believe would improve outcomes in defined contribution (DC) plans. The study, titled The Ideal DC Plan May be Closer Than You Think, is the fourth installment in The Path Forward research series exploring the future of DC plans and allows for comparisons with the earlier reports, which surveyed plan sponsors and consultants on similar topics.
"This year, we hit the pause key on soliciting plan sponsor feedback, to find out where participants concur -- and differ -- with those who are responsible for designing and overseeing their DC retirement programs," said Jim Danaher, Managing Director of Defined Contribution Solutions at Northern Trust. "The results are encouraging, because they indicate that participants would accept limits on longstanding DC plan features such as daily liquidity or taking loans of the reforms could lead to improved savings rates, investment returns and retirement outcomes."
The report finds several areas where participant and plan sponsor views could lead to important changes in DC plans:
"The evolution of DC plans from a supplemental benefit to the primary retirement vehicle for most U.S. corporate workers is well under way, and the plans are adjusting to reflect their changing role," said Susan Czochara, Senior Product Manager for Defined Contribution Solutions at Northern Trust. "While differences remain between the views of plan sponsors and participants, our survey shows the potential for greater shared responsibility, with both constituents acting toward the goal of securing sufficient income in retirement."
In previous installments of The Path Forward series, Northern Trust surveyed plan sponsors and consultants on the attributes of an ideal defined contribution plan structure, the challenges of engaging younger employees and the potential for defined contribution plans to adopt best practices developed by defined benefit plans and other institutional investors.
Defined Contribution Solutions at Northern Trust includes a team of investment, plan design and operations experts guided by a strategic vision that considers the perspectives of both plan sponsors and the ultimate beneficiaries, plan participants. Defined contribution assets under management have grown to more than $90 billion as of June 30, 2013, including more than $4 billion in target date investments. The asset management team works closely with Northern Trust's global custody unit to provide comprehensive comprehensive solutions including multi-manager unitization, integration of DB and DC plan investment pools, performance measurement and cross-border pooling. Northern Trust has approximately $222 billion in defined contribution assets under administration as of June 30, 2013. More information can be found at www.northerntrust.com/dcsolutions.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and Washington, D.C., and 17 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2013, Northern Trust had assets under custody of US$5.0 trillion, and assets under investment management of US$803.0 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at http://www.northerntrust.com/disclosures