J.P. Morgan Plan Sponsor Survey Reveals Significant Gaps between Plan Sponsor Intent and Plan Strategy Reality

--Larger plans lead the way with early adoption of innovative features

--Many plans continue to be inhibited by anticipated employee reactions to plan evolution

Sep 11, 2013, 14:29 ET from J.P. Morgan Asset Management

NEW YORK, Sept. 11, 2013 /PRNewswire/ -- J.P. Morgan Asset Management released today the results of an online survey of nearly 800 401(k) plan sponsors, which highlights a clear gap between the intent to provide retirement well-being for plan participants and the actual approaches they are using to achieve results. The report also uncovered issues that may be impeding progress toward achieving plan objectives.

Employers consider their role to go beyond just providing an effective 401(k) Plan, but measurement does not always reflect this goal

  • More than 75% of plan sponsors rate "increasing financial security" and "helping ensure employees have a financially secure retirement" as highly important, with percentages reaching into the 85% to 90% range for larger plans.
  • Suggesting that this concern goes beyond the realm of 401(k) plans, 60% of plan sponsors say they have a somewhat high to very high sense of responsibility for the "overall financial wellness of employees."
  • Yet, only about 40% see the number of participants with account balances on track to provide retirement security as a highly important measure of success.

Many plan sponsors need a nudge, and some proactive guidance

  • Only 14% of plan sponsors say their advisor or consultant proactively suggests new ideas and shares best practices for evolving their plan.
  • While many participants continue to underestimate how much income they will need in retirement, only 25% of plan sponsors consider promoting an understanding of what participants are on track to receive in retirement as a top communications goal.

"Employers see the need for change, but most need help in determining the best approach for their plan," said Catherine Peterson, Director of Retirement Insights at J.P. Morgan Asset Management.  "The new generation of 401(k) plan components – from design to investments, communications and administration – is readily available and simply needs to be prioritized, coordinated and managed toward plan objectives and goals.  There is a second generation 401(k) plan emerging and it shouldn't be reserved for large plan sponsors only." 

Employers are more worried about participant reactions than they need to be

  • The reason most frequently given by plan sponsors for not introducing automatic enrollment (27%) or automatic contribution escalation (30%) is concern that employees would not approve of these features.
  • In reality, a recent participant survey by J.P. Morgan (2013 Plan Participant Survey Findings) suggests greater support for these features than employers may think. Only 20% were opposed to such a combination. And two thirds of respondents had a high level of trust in their employers' ability to select an appropriate retirement plan provider and set investment options. 

"The implementation of auto features is absolutely critical to helping participants achieve optimal outcomes," said Peterson.  "Industry research1 shows that, once enrolled in a plan with auto enrollment and auto escalation, less than 10% of participants ever opt out. Imagine the impact these auto features can have on the saving habits of those employees. Providing more Americans with the experience and satisfaction of a secure retirement calls for the continued evolution of 401(k) plans with all parties contributing –  participants,  employers,  advisors,  plan providers and policymakers."

For more information about this survey, please visit:  2013 Defined Contribution Plan Sponsor Survey Findings


J.P. Morgan Asset Management conducted an online survey of 796 plan sponsors from December 18, 2012 to January 25, 2013.  Each respondent was a key decision maker with respect to the organization's defined contribution (DC) plan.  All companies represented have been in business for at least three years, offer a 401(k) or 403(b) plan to their U.S. employees and have at least 10 full-time employees. 

Below are breakdowns of our representative sample of plan sponsors both by plan assets and by organizational role.  Results aggregated across plan size categorize were weighted to reflect the size distribution of plans in the U.S. DC plan universe.

About J.P. Morgan Asset Management – Retirement

J.P. Morgan Retirement, with defined contribution assets under management of $85 billion, is a leading comprehensive retirement solutions provider dedicated to improving individual retirement outcomes. J.P. Morgan Retirement Plan Services provides bundled recordkeeping services to more than 650 clients and 2 million plan-level participants, representing more than $158 billion in retirement plan assets (as of June 30, 2013).  

About J.P. Morgan Asset Management

J.P. Morgan Asset Management, with assets under supervision of approximately $1.9 trillion and assets under management of $1.5 trillion (as of 6/30/13), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high-net worth individuals in every major market throughout the world.  J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity.  JPMorgan Chase & Co. (NYSE: JPM), the parent company of J.P. Morgan Asset Management, is a leading global asset management firm with assets of approximately $2.1 trillion and operations in more than 60 countries.  Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co.

SOURCE J.P. Morgan Asset Management