PLANSPONSOR - March - April 2023 - 23

30TH ANNIVERSARY | PARTICIPANTS
to help. We can be even more [useful] if we can help them figure
out the next best step they can take for a positive outcome,
whether that's increasing their contribution to get a match or
making sure they have emergency savings. "
The past three decades have also seen a shift in the way both
plan sponsors and employees think about their workplace retirement
plans: At first considered an auxiliary benefit, DC plans are
now a core part of the compensation package. In 2010, just onequarter
of employee respondents cited retirement benefits as a
reason to join a company, and 41% said it was a reason to stay.
By 2022, those numbers had increased to 47% and 60%, respectively,
according to WTW.
The provision for automatic enrollment and qualified
default investment alternatives by the Pension Protection Act of
2006 meant that even participants who wanted to be less handson
have also largely made progress toward a more secure retirement.
Since the PPA passed, the share of companies using autoenrollment
has more than tripled, says The Vanguard Group's
" How America Saves 2022. "
" The concept of automatic enrollment and default investments
has been fairly seismic in terms of how people think
about their responsibility for their own retirement and the world
in which defined benefit [plans] are not happening for you, "
Vaillancourt says. " They can still choose whether to participate
or not, but it really provides a vehicle for them to get into the
retirement plan and get those big behaviors under their belt. "
One unintended consequence of the PPA was that many plan
sponsors anchored their savings rate at 3%, but, in the decades
since, both sponsors and participants have come to recognize
that such a rate may not provide enough retirement security,
Vaillancourt says. Both parties have gotten more comfortable
with a higher automatic enrollment rate, she says.
'Meet Participants Where They Are'
Meanwhile, the trend toward customization, especially in recent
years, has also led to plan sponsors and retirement providers
looking to " meet participants where they are, " Abend says.
" That goes to things like hardship withdrawals, " she notes.
" They've always been allowed, but, in the last few years, with
natural disasters and COVID-19, Congress stepped up and
eased access to hardships [with the Coronavirus Aid, Relief and
Economic Security Act]. And there are provisions in SECURE
[Setting Every Community Up for Retirement Enhancement] 2.0
that address things like student loans and emergency savings. "
Jagatic cites the way the industry talks to participants about
hardship withdrawals as an example of increasing empathy and
awareness of participant challenges. A decade ago, the overwhelming
perspective was simply that participants should avoid
such withdrawals whenever possible.
" While that's true-and, ideally, people don't have to
make hardship withdrawals-as we think more broadly about
1993
Source: Department of Labor
2020
WHEN 'LATER'
MAY MEAN 'NEVER'
For workers in a field with short employee tenures,
a long, graded vesting schedule could seem unfair.
66.2%
2005
24.9%
2005
34.5%
2022
Source: PLANSPONSOR Defined Contribution surveys, 2005 and 2022
Immediately
3 or more years
THE DB TO DC SHIFT
Employers like the lower cost, easier operation-
and portability when participants leave.
12%
DB plans (12mm)
+51.56%
88%
DC plans
(85mm)
39%
DB plans
(25mm)
61%
DC plans
(39mm)
53.4%
2022
PLANSPONSOR.COM March - April 2023 23
64 million
total workplace retirement plans
97 million
total workplace retirement plans
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PLANSPONSOR - March - April 2023

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