By Chuck Epstein
The not-for-profit health care industry is boosting automatic deferral rates and taking other steps to better help its employees prepare for retirement
, according to a survey by the American Hospital Association and Transamerica Retirement Solutions.
The survey found that, among other items, healthcare retirement plan sponsors are increasingly implementing programs to address the challenge of employee engagement, a problem that 75 percent of sponsors agree is “one of the biggest challenges of managing a retirement plan.”
To do this, health care plan sponsors are increasing their educational efforts using different approaches (seminars, one-on-one meetings, customized print and electronic campaigns, investment advice and comprehensive financial planning) to help participants become better prepared for retirement. Sponsors are also increasing their default deferral rates and reducing the number of investment options.
More specifically, the study found that plan sponsors are placing “greater value … on retirement outcomes.”
This is being done, the study found, by relying less on participation rates and changing the measure to “retirement readiness.” The study found that plan sponsors who utilize retirement readiness as an indicator of plan effectiveness increased to 35 percent in 2014 from 23 percent in 2012.
Health care plan sponsors are also boosting their default deferral rates. Eighty-seven percent of surveyed plan sponsors indicated their plan’s default deferral rates were “not high enough.” As a result, the number of healthcare plan sponsors who offer automatic enrollment
default deferral rates of 3 percent or less declined to 48 percent in 2014 from 70 percent in 2012. On the other hand, the rate of sponsors using a default deferral rate of 5 percent or more nearly quadrupled during the same period, the study found.
To simplify investment choices, the study found that the percentage of healthcare plan sponsors who offer 20 or more investment options decreased from 48 percent in 2012 to 39 percent in 2014 and nearly four in 10 healthcare plans offer 20 or more investments. The study said “there is a clear trend toward offering a more streamlined set of investment choices” by plan sponsors.
Originally published on BenefitsPro.com