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Not-for-Profits Recognize Responsibility in Encouraging Positive Savings BehaviorsMost not-for-profit organizations believe they have a responsibility to encourage their employees to save for retirement, but only 10.6 percent of those organizations are able to measure potential participant outcomes as part of their retirement plans. According to a new survey of 403(b) plan sponsors from the Plan Sponsor Council of America (PSCA) and sponsored by the Principal Financial Group®, 27.1 percent of plan sponsors feel they have a responsibility to encourage savings and are taking measures to do so, while another 25.8 percent acknowledged that same responsibility and know they need to do more to support positive savings behavior. More than a third of respondents (35.0 percent) reported they encourage their employees to save but don't want to "force it," and only 10.3 percent felt by offering a plan they fulfill their responsibility as an employer. "It's no surprise the majority of not-for-profit organizations recognize the important role they play in helping their employees prepare for retirement," said Bob Benish, executive director of PSCA. "We continue to see 403(b) plan sponsors make progress in building better retirement programs, and encouragement and education are key factors in helping participants create positive outcomes." Just 10.6 percent of 403(b) plan sponsors are monitoring potential participant outcomes by providing their participants with access to modeling and income-stream projections offered through the plan service provider. "When saving for retirement, it's important to include a desired outcome or personalized goal within the process," said Aaron Friedman, national tax-exempt practice leader at The Principal®. "It's encouraging to see some plans are already measuring potential participant outcomes, but we believe it's something all plans should be doing to help participants know whether they're on track for a more secure retirement."
Automatic Enrollment "Traditionally, not-for-profit organizations have been characterized as paternalistic toward their employees. Many provide very generous retirement savings plans, but simply having the benefit available doesn't mean everyone takes advantage of it," Friedman said. "That's where automatic enrollment can be beneficial."
Education and Financial Wellness But nearly a quarter of plan sponsors (23.2 percent) offer a holistic financial wellness program beyond the retirement plan, which could include education on health care, debt management, financial planning and saving for college. Another 20.3 percent plan to add a similar program in the future. "It's crucial to be able to see the whole picture when it comes to financial wellness," Benish said. "I commend those plan sponsors already offering holistic financial wellness programs and think it's a positive that so many more have plans to." PSCA's Attitudes Towards Retirement Readiness in 403(b) Plans reflects responses from 381 not-for-profit organizations that currently sponsor a 403(b) plan. Full survey results are available here. For more research, analysis and insights from The Principal®, visit The Principal Knowledge Center and connect with us on Twitter.
About the Plan Sponsor Council of America
About the Principal Financial Group Bob Benish and PSCA are not an affiliate of any company of the Principal Financial Group.
1 "The Principal Financial Group" and "The Principal" are
registered service marks of Principal Financial Services, Inc., a member
of the Principal Financial Group.
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