Retirement readiness:
a work in progress

The 2016 BlackRock DC Pulse Survey

imagepulse

When the Pension Protection Act became law 10 years ago, it confirmed the transformation in workplace retirement plans that was already gaining traction. Since then, plan sponsors and providers have increased their efforts to overhaul 401(k)s and other defined contribution plans.

Still, BlackRock's DC Pulse Survey of plans and participants uncovers the stark contrast between sponsors' perceptions of their plans' effectiveness — and participants' feelings about their own retirement readiness. With many participants counting on plans for retirement income, the need for action is greater than ever.

200 1,003 $300M+
Plan Sponsors Participants Plan Assets

The gap between plan sponsors and participants

The gap between plan sponsors and participants

How do plan sponsors' perceptions about their participants' understanding of how much money they need to set aside compare with their participants' views?

64%
of plan sponsors think participants understand how much money to set aside.

How informed are participants?

Plan sponsors think their participants understand their investment options and other retirement savings information better than participants say they do.

67%
of plan sponsors think that their participants understand their investment options.

Do participants know how to best utilize their plan features?

Two out of three sponsors think that their participants know how to best utilize their plan features - but plan participants are sending out a different signal.

42%
of plan participants would be interested in getting help determining how much they should contribute to their plan

One plan, two views:

How prepared are participants?

There's a big gap between what plan sponsors think their participants know about saving and investing — and what participants actually know. By identifying the disconnect in participants' understanding of savings strategy, investment options and income potential, sponsors can pinpoint strategies to correct them more effectively.

one page one view

Automatic for the people:

Participants are sending out a signal

Only one out of three participants are satisfied with plan support for monitoring and changing their savings rates — and 42% would be interested in getting help determining how much they should contribute to their plan.

Automatic for the people

The multi-generational workforce:

One size does not fit all

When it comes to retirement saving, Boomers, Gen Xers and Millennials express different levels of interest, understanding and need. Learning the distinctions in what they want can help the DC industry target everything from communication to plan design — and get people saving earlier in their careers and investing more effectively for their life stage.

The multi-generational workforce

Post-retirement:

Ready or not, here they come

Boomers are counting heavily on workplace savings to ensure a secure retirement, with nearly half calling it their biggest source of retirement income — but they don't have strong conviction about what to do with workplace savings when they retire.

Post-retirement

Participant engagement:

Making it all easier to understand

Nearly half of the participants surveyed feel that their employers' communications don't really help them decide what they should be doing — and more than half of them believe that their employers should do more to help them prepare for retirement.

Participant engagement

5 WAYS TO BUILD BETTER RETIREMENT OUTCOMES

Everyone involved in workplace retirement saving recognizes possible danger ahead if employees don’t start saving more and optimizing their investments. By tapping solutions available today, plans can make meaningful improvements in participant outcomes.

  • Analyze current plan design — and model the impact of potential changes on participant outcomes.
  • Automate enrollment, savings escalation and catch-up contributions so participants have to "opt out" rather than "opt in."
  • Reenroll participants in updated investment strategies and automatic features.
  • Recognize that there's no "average" participant: examine specific participant segments to course correct for those who need help most.
  • Prioritize participants communications that help employees take action and get the most out of the plan.

Source for all data: BlackRock DC Pulse Survey, September 2015

The conclusions are intended to provide an indication of the current attitudes of a sample of U.S. plan sponsors and participants about retirement saving and investing and should not be relied on for any other purpose.

Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal or volatility of returns.

©2017 BLACKROCK, Inc. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. All other trademarks are those of their respective owners.

FOR INSTITUTIONAL OR PROFESSIONAL USE ONLY.

Prepared by BlackRock Investments, LLC,member FINRA.

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