2018 BlackRock DC Pulse Survey
Participants are confident. Plan sponsors are concerned: The 2018 DC Pulse Survey tells us about this disconnect and how plans can help steer participants toward their long-term financial goals.
BlackRock’s annual DC Pulse Survey engaged with 228 plan sponsors and 1,000 DC plan participants on the current state of defined contribution. This year’s survey revealed differing perspectives that plan sponsors need to be aware of to effectively manage participants toward retirement. Here are some key findings:
Participants are increasingly confident
For the past two years, the percentage of participants who feel on track for retirement has continued to rise. Following this trend, this year's DC Pulse found many participants increasingly confident about their retirement prospects and overall financial well-being, with market performance helping to fuel their optimism.
Positive sentiments about retirement outweigh negative sentiments:
2018 DC Pulse Survey: “Words that best describe how you feel about retirement investing through your plan”
Market performance is lifting
participant confidence
Strong market returns may have made participants bullish. The percentage of participants who believed their investments performed up to expectations has increased over the past two years.
Market performance correlates to participant confidence:
Participants who believed their investments were performing up to expectations, 2016-2018.
Source: S&P 500, 2016-2018; BlackRock.
In contrast, plan sponsors are concerned – and are taking action
At the same time, plan sponsor concern about retirement preparedness has jumped significantly – 54% believe the majority of their participants will need to delay retirement, up from 29% last year. Plan sponsors may be more aware of market cycles and potentially lower returns in the future – and more likely to understand the potential importance of saving behavior over market returns in building retirements.
The survey found that more than half of plan sponsors have taken action in the past two years to address these concerns.
Top 3 actions plan sponsors have taken:
Plan sponsors and participants alike are concerned about retirement spending
70% of participants believe they won’t have the level of retirement income enjoyed by previous retirees. For nearly half (49%), their primary retirement goal is not outliving their money. They are looking to their employer for help developing a spending plan.
Sponsors want to help:
What’s the takeaway for plan sponsors?
Plan sponsors are more likely to keep the long-term view in mind and need to guide participants into more potentially productive behaviors. In fact, nearly half (42%) of plan sponsors do not expect their participants to rollover their savings at retirement, meaning that guidance may be required beyond the retirement date.
Target date funds have the potential to help manage participants across a range of concerns by offering downside protection to potentially dampen overreactions to down markets. What’s more, 58% of sponsors agree that a target date fund’s suitability as a decumulation vehicle is important when selecting a fund.
Target date funds are increasingly considered as potential sources of retirement cash flow.1
Using a target date fund as a decumulation vehicle may help plan sponsors provide a common set of spending tools and a basis for strategic communication to manage growing concerns about retirement spending.
For more insights from the 2018 DC Pulse Survey, including findings about women, millennials, 403b plan sponsors and more, download the full report.
