NEW YORK, July 25, 2016 /PRNewswire/ -- J.P. Morgan
Asset Management today released proprietary findings from its
fourth research study of plan participants. The resulting white
paper, "Guiding Participants from Intent to Action: 2016 Defined
Contribution Plan Participant Survey Findings," reveals: many
participants are still not confident in their approach to saving
and investing; there appears to be a human disconnect between
participant intent and action; and a potential misperception about
participant support for automatic features and strategies may be
holding plan sponsors back from strengthening their defined
contribution (DC) plans.
In addition to looking at results for participants as a whole,
the paper examines similarities and differences across investor
types -"do it for me" and "do it yourself" investors; and includes
high-level findings for two age cohorts - those under 30 years of
age and those 30 years of age and older. It also explores key steps
plan sponsors can take to help proactively place participants on a
path to financially secure retirement.
The survey of 1,001 DC plan participants found most are still
uncertain that a financially secure retirement awaits them because:
more immediate financial demands interfere with their ability to
save for the future; many don't have a clear understanding of how
to set a retirement savings goal; and most are not confident in
their ability to make investment decisions. Plan sponsors, for
their part, can and have provided education and tools to help
participants size their retirement need, set realistic savings
goals and improve their knowledge of investing. However, survey
results suggest that focusing on closing the knowledge gap is not
enough. When it comes to saving and investing for retirement,
another gap exists – a disconnect between participant intent and
action. Key findings include:
- Many participants know they are not saving enough (68% say
their 2015 contributions were below where they should have
been).
- Most participants (81%) say they are interested in doing
financial planning for retirement, but almost half (45%) do not
have a plan.
- Nearly half of participants (48%) admit they simply do not
spend enough time thinking about and planning for retirement.
- Many participants may not be fully engaged in managing their
401(k) accounts. For example, 28% have never rebalanced their
401(k) account, 31% have never made a change to their initial
choice of investment options, and 18% have never increased their
contribution amount.
"Since 2007, our surveys have tracked the knowledge, behavior
and attitudes of 401(k) participants. While some progress has been
made, many DC plan participants still face significant barriers to
reaching retirement goals. We think plan sponsors have an
opportunity to strengthen their plans and help provide the
necessary catalysts for transforming intent to action," said
Catherine Peterson, Managing
Director and Global Head of Insights Programs, J.P. Morgan Asset
Management. "We strongly believe that the most effective way for
plan sponsors to help put employees on the path to a more secure
retirement is to proactively place them on that path. This can be
done through the use of automatic features and strategies such as
automatic enrollment, automatic contribution escalation and
re-enrollment, in conjunction with a qualified default investment
alternatives (QDIA), such as a target date fund. We urge all plan
sponsors to work with their industry partners to consider these
features and strategies to help strengthen their DC plans."
Based on our research findings, most participants appear to
support plan features and strategies, designed to offer a
disciplined approach to saving, simplified investment choices, and
improved asset allocation. Key findings include:
- Roughly three-quarters of participants are in favor of or at
least neutral toward automatic enrollment (75%) and automatic
contribution escalation (74%).
- Roughly two-thirds (67%) are in favor of or at least neutral
toward a combination of these two features.
- A large majority (90%) find target date funds appealing.
- Most (82%) are in favor of or at least neutral toward
re-enrollment.
The analysis also shows that participant experience with these
features and strategies is very encouraging:
- Among those automatically enrolled in their plans, only 1%
opted out, nearly all are satisfied (96%), and almost a third (31%)
say they would not have enrolled otherwise.
- Among those whose contribution amounts are/were automatically
increased by 1% to 2% each year, almost all are satisfied (97%),
and 15% say they were unlikely to have escalated their
contributions if not for this automatic feature.
- Among those who went through a re-enrollment, 73% allowed their
assets to be moved to a target date fund, and 99% of those whose
funds were moved are satisfied.
"Strengthening DC plans will require plan sponsors to carefully
consider these features and strategies and establish the
appropriate balance between maximizing participant autonomy and
proactively placing participants on a path to a financially secure
retirement," continued Ms. Peterson. "With the skillful
collaboration of all involved, receptivity to practical new
developments in plan design features and investment strategies, and
awareness of participants' needs and wants, we believe the
fortification of DC plans will continue to advance at a steady
pace. Working together, we can help to ensure that more members of
the U.S. workforce experience a financially secure retirement."
To learn more about J.P. Morgan Asset Management's leading DC
investment strategies, product innovations, resources and
Retirement Insights program for advisors and plan sponsors, please
click here, or to view the full paper "Guiding Participants from
Intent to Action: 2016 Defined Contribution Plan Participant Survey
Findings" please click here.
Methodology
From January 12
through January 25, 2016, J.P. Morgan Asset Management
partnered with Mathew Greenwald
& Associates, a market research firm based in Washington, D.C., to conduct an online survey
of 1,001 defined contribution plan participants.
In order to qualify for the study, each respondent had to be
employed full-time at a for-profit organization with at least 50
employees, be at least 18 years old and have contributed to a
401(k) in the past 12 months.
Survey results have been weighted by age, gender and education
to reflect the overall makeup of the general population of 401(k)
plan participants. In a similarly sized, random sample survey of
general population respondents, the margin of error (at the 95%
confidence level) for the total population in this study would be
plus or minus approximately 3.2 percentage points.
About J.P. Morgan Asset Management
J.P. Morgan Asset
Management, with assets under management of $1.7 trillion, 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 $2.5
trillion and operations worldwide. 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. and its
affiliates worldwide.
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SOURCE J.P. Morgan Asset Management