PLANSPONSOR - October/November 2020 - 5

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2020 DC Survey: Plan Benchmarking
POINTS
COMPARISO
C
of
This year's survey turned up many differences
between DC plans-but a load of similarities, too
OVID-19 has been the dominant force affecting nearly every aspect of life this
year-including retirement plans. Experts say retirement plan legislation, litigation
and education have been the other big focal points for the industry in 2020 and will
influence thought about financial wellness going into '21.
The 2020 PLANSPONSOR Defined Contribution (DC) Survey was fielded in late summer
and early fall, at least six months into the pandemic, and our analysis starts with the impact it
has made. Besides asking about COVID-19, we also moved beyond our traditional explorations
to learn plans' responses to several headline topics, including the broad growing approval for
environmental, social and governance (ESG) investment and the new safe harbor provision
2020 DC Survey: Plan Benchmarking
Automatic Features
Adoption of automatic enrollment and automatic escalation
continues to rise-now at 51% and 46% respectively, vs. 48% and
23% last year. Yet, their future growth may depend on acceptance
among smaller plans-i.e., those having under $50 million in plan
assets. Less than 50% of those plans have implemented either
feature vs. the more than 75% of plans with over $200 million that
have implemented one or both. When offered, target-date funds
(TDFs) remain the dominant default investment option, as usage
increased for the fifth year in a row and now stands at 76%.
Plans Using Automatic Features
n Auto-Enrollment n Auto-Escalation
76%
69%
60%
51%
46%
27%
All plan
sizes
22%
<$5mm
$5mm -
$50mm
>$50mm -
$200mm
>$200mm
Average Plan Participation Rates, by Features Offered
88.5%
81.5%
67.4%
73.1%
47%
42%
Auto-enrollment
and -escalation
Auto-enrollment
only
Auto-escalation
only
No " auto " plan
features
Trend in Plans Using a TDF for the Default Investment
76%
7.3%
74%
73%
69%
66%
62%
2015
2016
2017
2018
2019
2020
<3%
3% - 5%
>5%
Plan matches catchup
contributions
26%
Match sub
limits/c
6.2%
2014
41%
2015
42%
2016
2017
2018
2019
2020
Average Participant Deferral Rate, by Default Rate
8.4%
66%
Other Match Provisions
46%
Plans With a >3% Default Deferral Rate
48% 48%
50%
39%
80%
that has eased implementation of systematic withdrawals.
" Plan sponsors are starting to understand the anxiety their employees are facing, " explains
Stan Milovancev, executive vice president at CBIZ Retirement Plan Services in Cleveland.
" The pandemic has highlighted that these workers have a lot of financial stress, and that stress
Default Deferral Rate
affects mental health, physical health and any relationships in their lives. "
For many plans, employing the traditional strategies they followed pre-COVID, yet
20 PLANSPONSOR.COM October - November 2020
Many factors influence participant outcomes, but savings rates are
often viewed as one of the best measures of long-term success-
participants who save more stand to accumulate more over time.
Because of this, it is encouraging to see that automatic enrollment
continues to push savings rates higher: The percentage of defined
contribution plans with a default deferral rate over 3%, a common
benchmark, reached 52% this year-an all-time high. Not surprisingly,
higher default deferral rates are also correlated with higher
average overall participant deferral rates.
Art by Dion MBD
Default Deferral Rate
l ≤2%
l 3%
l 4%
l 5%
l ≥6%
l Other
4%
9%
73%
27%
35%
13%
12%
All plan
sizes
52%
<$5mm
$5mm -
$50mm
>$50mm -
$200mm
Plans With 'True-up' Match Provision
l Yes
l No
l Don't know
14%
>$
64%
74%
factoring in what they have learned since, may be the way to go, next year.
Ed Farrington, executive vice president with Natixis Investment Managers in Boston, says
it is important for plan sponsors to maintain good communication and educational practices
Match Features
Offered in 73% of all defined contribution plans, matching contributions
are a popular way for employers to supplement participant
retirement savings. However, use of matching contributions slid for
the second consecutive year, down from 77% in 2018. The largest
decrease is found among plans with under $5 million in assets; of
these, 64% offer a match, vs. 73% in 2018. Still, employer match
features continue to get more participant-friendly. For example,
41% of employers now offer a " true up, " and 80% make match
contributions each pay period-both up from last year.
Plans Offering Employer Match
76% 81%
Mat
Emp
ma
pa
m
t
24 PLANSPONSOR.COM October - November 2020
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