The Path Forward Study

Employees Favor Companies Playing More Active Role in Their Retirement Plans

Study: Sponsors are reluctant to assume fiduciary role

May 15, 2015 — CHICAGO–(BUSINESS WIRE)–Employees overwhelmingly favor their employers playing a more active role in their defined contribution (DC) retirement plans, but plan sponsors voice reluctance to doing so, a new study from Northern Trust shows. “

The issue is critical since more than 88 million U.S. employees now participate in a 401(k) or similar DC plan, in which employees and often their employers contribute to an individual retirement account.

Such plans now hold more than $6.8 trillion in assets.


In a survey of more than 1,000 DC plan participants, Northern Trust found:

  • 88 percent strongly or somewhat favor their employers providing tools to help determine if they are saving the correct amount for a financially secure retirement
  • 80 percent believe employers should encourage employees to contribute to their retirement plan, and 84 percent support employers providing incentives to encourage contributions
  • 72 percent think employers should provide a viewpoint on contribution amounts.

In addition, more than four-in-five employees surveyed said they would consider taking their employer’s advice when determining their contribution to a 401(k) plan. For their part, plan sponsors interviewed for the study have reservations about taking a more active role in encouraging specific levels of saving and providing projections of retirement savings or income for participants.

“Plan sponsors generally agree it’s important to encourage saving for retirement,” said Jim Danaher, managing director of Defined Contribution Solutions at Northern Trust. “They have real concerns, however, about providing participants with targeted recommendations – by salary level or age – about how much they should be saving.”

Employee behaviors must change

The differing survey responses suggest employer behavior needs to change as employees look for plan sponsors to take a more active role in their retirement plans. At the same time, the study shows that policy issues, such as management’s role as a fiduciary, must be clarified before senior leaders will be comfortable providing the level of guidance sought by plan participants.

The study represents the fifth installment in Northern Trust’s research series, The Path Forward, exploring the future of defined contribution plans. In addition to the online survey of 1,007 participants, the study is based on 43 in-depth interviews with plan sponsors, whose plans have assets totaling more than $352 billion, and 10 leading plan consultants. Research firm Greenwald & Associates conducted the survey and interviews.

“Clearly most American workers must save more to have a financially secure retirement,” said Mathew Greenwald, President of Greenwald & Associates. “This survey found that most who participate in a retirement plan believe they are able to save far more for retirement than they are now. Indeed, two in three plan participants say that can save at least 10 percent of their salary. A key issue is how to help workers set aside the amount of money they know they should, and these workers believe their employers can provide crucial assistance.”

Improving DC Plans

Based on the employee survey results, Northern Trust identified themes to guide employers as they consider evolving their DC plans to help employees achieve financial security in retirement:

  • Step It Up
    Increase the employer role in encouraging retirement savings, such as making specific recommendations for age or salary levels and encouraging participation in retirement planning.
  • Provide Projections
    Employees are interested in receiving projections of retirement savings or monthly or yearly retirement income, in addition to their current account balance. Sixty percent of participants surveyed think they are behind schedule on savings. Plan sponsors generally favor the idea, although some expressed concern about the accuracy of projections.
  • Investments for Retirees
    Add investment options specifically designed to provide a stream of predictable income for retirees. Participants said they would find such options attractive and plan sponsors conceptually like the idea of investment options that could reduce rollovers from company-sponsored plans to Individual Retirement Accounts (IRAs), which may have higher fees and less fiduciary oversight.

Some Obstacles Emerge

They have real concerns, however, about providing participants with targeted recommendations – by salary level or age – about how much they should be saving

Interviews with senior executives at large plan sponsors revealed that fiduciary concerns about making prescriptive recommendations are a primary roadblock to more proactive management of DC plans.

But plan sponsors’ views were also influenced by factors unique to their retirement plans, including the age or financial sophistication of their workforce and whether their company still offers a traditional defined benefit pension plan.

“The concept of employers taking a more active role in the retirement plans of their employees has yet to catch on throughout the broader marketplace,” explained Susan Czochara, Senior Product Manager for Defined Contribution Solutions at Northern Trust. “However, simply providing participants with a DC plan and retirement planning tools are not sufficient to ensure they will adequately plan and save for retirement. Our survey indicates that employees would welcome, rather than resent, a stronger guiding hand from their employers. Based on these results and other trends in the marketplace, we view proactive plan sponsors as becoming the new norm.”



Defined Contribution Solutions at Northern Trust includes a team of investment, plan design and operations experts guided by a strategic vision that considers the perspectives of both plan sponsors and the ultimate beneficiaries, plan participants. Defined contribution assets under management have grown to more than $120 billion as of March 31, 2015, including more than $7.5 billion in target date investments.

The asset management team works closely with Northern Trust's global custody unit to provide comprehensive solutions including multi-manager unitization, integration of DB and DC plan investment pools, performance measurement and cross-border pooling. Northern Trust has approximately $280 billion in defined contribution assets under administration as of March 31, 2015. More information can be found at

About Greenwald & Associates
Founded in 1985, Greenwald & Associates is a Washington, D.C.-based full-service market research firm with unique industry expertise, extensive research knowledge and a commitment to serving its clients. Together with the Employee Benefit Research Institute, it co-sponsors the annual Retirement Confidence Survey, now in its 25th year of publication.

About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 20 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2015, Northern Trust had assets under custody of US$6.1 trillion, and assets under management of US$960.1 billion. For 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit or follow us on Twitter @NorthernTrust.