PLANSPONSOR - August/September 2019 - 44

Hypothetical Trade-Off Scenarios
Respondents were presented with two options for each of the following scenarios and selected their preference
53%
One-time
$5,000
bonus
59%
Guaranteed
3% annual
return
51%
Pay lower fees but
accept " below
average " returns
56%
Job with a firm with
a 401(k) plan but that
pays 10% less
40%
$1,000 employer
contribution to your
DC account
47%
41%
One-time $5,000
contribution to your
DC account
Market-based return
that might greatly
exceed 3% but also
could lose money
49%
Pay higher fees in
hope of receiving
" above average "
returns
44%
Job with a firm
without a 401(k)
plan but that
pays 10% more
60%
$1,000 employer
contribution
toward paying down
student debt
39%
51%
3% employer match
that is immediately
vested
$250 per month
reduction in health
insurance premiums
58%
One-time $10,000
contribution made to
DC account today
42%
Job with a firm with
a 401(k) plan but that
pays 20% less
47%
$1,500 nondiscretionary
employer
contribution
61%
49%
6% employer
match vested
after 5 years
$250 per month
increase in employer
contribution to your
401(k) account
42%
Guaranteed, lifetime,
tax-free monthly
payments of $200/mo.,
starting at age 65
58%
Job with a firm
without a 401(k)
plan but that pays
20% more
53%
$2,500 matching
employer contribution,
requiring $5,000
employee contribution
Participant Trade-Offs: What Tips the Scale in Hard Benefits Decisions?
Further, our 2019 survey confirms that DC plans can help
he defined contribution (DC) industry has evolved since 2014,
the year of our first PLANSPONSOR Participant Survey, but
participants remain largely unchanged in how they value-and
would trade off-employer benefits.
As a general rule, employees prefer benefits that deliver
greater vs. quicker financial impact. For example, 61% of respondents
prefer a 6% match that becomes vested after five years
to a 3% match that is immediately vested. Similarly, a record
53% of respondents now prefer a $2,500 matching contribution
to a $1,500 employer contribution that does not require that
employees pay in. This perhaps reflects a growing acceptance by
employees of their role in saving for retirement.
44 PLANSPONSOR.com August - September 2019
" attract and retain " employees-within limits. This year, 56%
of respondents would choose an employer with a 401(k) but
offering 10% less pay to one that offers 10% more pay without a
plan. However, loyalty appears to have its limits, as that number
drops to 42% when the pay gap is 20%.
When choices have no clear difference in value, employees
lean toward shorter-term benefits. A slim majority (53%) would
opt for a one-time $5,000 bonus over a one-time $5,000 contribution
to a 401(k) account, while a more decisive 60% of those with
student debt would opt for a $1,000 employer-sponsored student
debt payment over a $1,000 contribution to a 401(k) account. -PS
T
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PLANSPONSOR - August/September 2019

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