SOURCE: SEI

SEI

February 18, 2016 10:30 ET

SEI Survey: Plan Sponsors Feel DC Plans Are in Need of a Major Re-Design

Most Lack Confidence Participants Will Have Needed Amount of Income to Retire

OAKS, PA--(Marketwired - Feb 18, 2016) - Research released today by SEI (NASDAQ: SEIC) found that the majority of U.S. defined contribution (DC) plan sponsors feel their employees will not retire at retirement age and recognize the potential impact of an aging workforce on their businesses, including increased healthcare costs, added expenses of higher salaried employees and turnover of younger employees blocked in the organization. In addition, most plan sponsors feel that DC plans will be the primary retirement income source, but aren't currently designed to fill that role.

"Plan sponsors are realizing the potential financial impact that employees not being able to retire at retirement age could have on their businesses," said Joel Lieb, Director of Defined Contribution Advisory Team, SEI's Institutional Group. "This is not a problem that is 30 years away, but one that could be a significant business challenge within the next decade. Plan sponsors should be identifying the goals of their plans and conducting analysis that will support a re-design more aligned with helping participants meet their retirement income goals."

According to the survey, plan sponsors are taking some steps to change aspects of their current plans. There is increased focus on the quality of investments being offered to employees over performance and fees. Survey participants ranked "quality of investment options" as the highest priority for their organizations when making investment decisions for the DC plan, over fund performance or plan fees.

As part of this shift toward quality, nearly two-thirds of those surveyed agreed it is a good idea to separate asset management services from recordkeeping. More plan sponsors reported using non-recordkeeper single manager funds and non-recordkeeper multi-manager funds than using proprietary funds offered by their recordkeeper in their core line-ups.

The survey also identified several key areas for further re-design opportunities. First, simplifying core menu offerings into streamlined, high-quality options for participants continues to be an area of need. Two-thirds of those plan sponsors polled offer more than 11 core menu options (not including TDFs) in their plan lineups -- and 24 percent offer more than 16 options to choose from.

Additionally, plan sponsors might benefit from gaining a better understanding of how brand-name funds could potentially sway participants in their investment decision-making process. Only 20 percent of plan sponsors surveyed said it is likely they will implement white-label fund options in the next 12 months.

The poll was conducted by SEI's Defined Contribution Research Panel in December 2015 and completed by 231 executives representing DC plans ranging in size from $25 million to over $5 billion. This summary is the first of three parts. The second part will focus on TDFs and will be released in April 2016. The third part will focus on DC oversight and governance, and will be released in June 2016.

For the complete poll summary, email seiresearch@seic.com.

About SEI's Institutional Group
SEI's Institutional Group is one of the first and largest global providers of outsourced investment management services. The company delivers integrated retirement, healthcare and nonprofit solutions to 470 clients in eight countries. Our solutions are designed to help clients meet financial objectives, reduce business risk and fulfill their due diligence requirements through implemented strategies for the management of defined benefit plans, defined contribution plans, endowments, foundations and board designated funds. For more information visit: seic.com/institutions.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2015, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $670 billion in mutual fund and pooled or separately managed assets, including $262 billion in assets under management and $408 billion in client assets under administration. For more information, visit seic.com.

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