Nonprofits have their sights on improving retirement plan participation and providing resources to workers, and plan to place less importance on compliance and fees than they have in the past.
That's according to a report published Wednesday by the Plan Sponsor Council of American and Principal Financial Group, which surveyed 139 sponsors of 403(b) plans in October.
Sponsors’ leading priority for next year is improving participation rates, cited by 22.5% of nonprofits. That differs from results of a similar survey conducted in 2019, when their top concerns for 2020 were compliance and reducing fiduciary liability, a priority cited by 31.4% of sponsors, according to PSCA. By comparison, for 2022, 21.7% of sponsors are most concerned with compliance and fiduciary issues.
A report earlier this year from PSCA found that about 77% of nonprofit employees participate in 403(b)s, up from 72% in 2018. Workers' average savings rate was 6.2%, down from 7.2% in 2019.
The more recent survey also found a roughly 50% increase in interest in providing financial wellness services to participants, with 12.3% of sponsors citing that, up from 8.5% who had planned to do so in 2020.
There was also an uptick in interest in retirement income, with 13% saying it was a top priority to add to their plans next year, up from 6.2% who said so in the 2019 survey.
When asked about their second priorities for their retirement plans in 2022, more than 17% of sponsors said they wanted to help increase employees’ savings rates and improve financial education for their workers.
Sponsors across the board appear to be comfortable with the relationships they have with plan providers and advisers, with just 1.4% saying they planned to conduct searches for either in 2022, only a slight change from their intentions in 2020.
When it comes to cybersecurity, nonprofits appear to be relying almost entirely on the precautions taken by their plans’ service providers. Zero percent said they planned to implement cybersecurity initiatives next year, compared with 1.2% that planned to do that in 2020, according to PSCA.
More than 96% of the nonprofits surveyed said that the pandemic has not affected the priorities and objectives for their retirement plans.
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