Training and recruiting are top worries
December 17, 2013- DES MOINES, Iowa–(BUSINESS WIRE)–Non-profit organizations are bracing for a potential workforce brain drain from retiring baby boomers over the next five years, with two-thirds expecting some kind of impact on their organizations.
A new survey of 403(b) plan sponsors, from the Plan Sponsor Council of America (PSCA) and sponsored by the Principal Financial Group®, finds that most (69 percent) plan to replace the majority of retirees but well over a third (38 percent) expect recruiting challenges.
“Many non-profit organizations rely heavily on 403(b) plans—instead of salaries—to compete for the best employees,” said Bob Benish, executive director of PSCA. “We’ve seen 403(b) plans improve dramatically over recent years. It is clear those plans will be increasingly important in the race for high performers, especially in higher educational institutions.”
Bigger plans, more retirees
More than half of all 403(b) sponsor respondents (54.4 percent) expect between 10 and 20 percent of their workforce to retire over the next five years. However, 20 percent of larger organizations (500 or more employees) expect to lose one-fifth of their workforce to retirement. Most are higher educational institutions where a spike in hiring professors in the 1970s and 80s is leading to a significant number of potential retirements in the near future.
“As a generation of academics nears retirement, financial professionals have another reason to focus on higher education as an opportunity to grow their business,” said Aaron Friedman, national tax-exempt practice leader, The Principal®. “Financial professionals who can help enhance plan designs—making plans more successful and therefore better appreciated by employees—stand to position themselves well in this burgeoning non-profit marketplace.”
In addition to concerns over recruiting, survey respondents say the other top anticipated challenges include:
- An increased need for training (42.7 percent)
- Skill gaps in the workforce (39.9 percent)
- The reallocation of responsibilities causing a burden on remaining employees (38.1 percent).
- Increased use of technology (33.5 percent)
- Helping employees help themselves
While seven out of 10 plan sponsors believe planning for retirement is the employees’ responsibility, two-thirds (66.8 percent) provide retirement planning education—including nearly 90 percent of large organizations.
“403(b) sponsors recognize the need to both encourage employees to accept responsibility to prepare for their own retirement and at the same time help them prepare for the transition,” said Benish. “That is important because while employees generally expect to work into their 60’s, studies consistently show many end up retiring before they planned, often due to health reasons1.”
Results of the survey are here.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA), a national, non-profit association of 1,200 companies and their six million employees, advocates increased retirement security through defined contribution programs to federal policymakers. PSCA makes practical assistance available to its members with plan design, administration, investment, compliance, and communication materials. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA’s services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses, and non-profit organizations.
About the Principal Financial Group
The Principal Financial Group® (The Principal®)2 is a global investment management leader offering retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $466.2 billion in assets under management3 and serves some 19.0 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.