Plan sponsors shift focus away from costs

With about one-third of plan sponsors citing it as their major concern, effectively preparing employees for retirement financially has slightly edged out an emphasis on reducing plan costs as their top issue. That was the key finding of Fidelity Investments' ninth annual study of plan sponsor attitudes, which also found that 82% of sponsors are making changes to their plan design and 83% are changing their investment menus. The survey also found that more plans than ever — 92% — use plan advisers, and that the number of plan sponsors actively looking to switch plan advisers — 22% — while historically high, is down considerably from an all-time high of 38%. The reason for most plan design changes, the survey found, was to increase employee participation or savings rates. A greater percentage of plan sponsors — 39% versus 25% in 2017 — reported that they added or changed a matching contribution, making that the top change to plan design this year, with 56% of sponsors saying they made that change to increase employee participation and 47% saying they did it to increase savings rates. The top changes to investment menus included replacing an underperforming fund — 33% — adding an index fund — 28% — and adding a lower-cost class of shares — 25%. The study surveyed sponsors that use a variety of record keepers and have at least 25 participants and $10 million in plan assets.