Emergence of contract work changing the workplace landscape
LIMRA experts have put together their 10 predictions for 2018, ranging from sales forecasts to the impact of technology and the digital market. Overall, LIMRA anticipates a year of continued evolution for the financial services industry with new products and solutions, as well as shifts in the market and consumer behavior.
One specific prediction is the idea that defined contribution (DC) plans will evolve to provide more options for contract or independent workers. In recent years, there has been an increase in contract workers, changing the workplace landscape. Since they are not traditional employees, they were not as likely to have access to the same benefits, like a DC plan, as traditional employees.
LIMRA expects there will be growth in employment-enabled retirement savings, but not necessarily employer-sponsored retirement savings plans. LIMRA predicts more employers will enable their workers to participate in third-party retirement savings solutions. An example is the relationship that Betterment has with Uber, where drivers in select cities may use their Uber app to open (and contribute to) an IRA account with not fees for the first year. LIMRA expects employers will start using creative ways to tie the mechanics of saving for retirement together to balance contemporary work and compensation models.
For 40%, no DC access
The DOL estimates nearly 40 percent of US workers do not have access to traditional DC plans. To address this need, some states now require employers that do not offer DC plans to their employees to participate in a state sponsored program. LIMRA predicts employees will take advantage of state-mandated retirement plans, which would allow employees who might otherwise not have access to a retirement saving plan the ability to save through payroll deductions. Research has shown using payroll deductions increases the likelihood that employees will participate in retirement savings plans.
Our research suggests some innovative employers might introduce hybrid retirement savings models. These models would combine creative plan designs and investment options along with fiduciary services to help expand coverage to more workers. This will enable more employers to offer solutions similar to traditional DC plans while also limiting liabilities and administrative burdens.
The study also predicts continued significant investment in InsurTech. There is a continued high level of interest in this space. Insurers are investing heavily in tech firms as investment opportunities and as partners. While venture capital firms continue to view the InsurTech segment as attractive.
Organizations will increasingly harness digital strategies and technological solutions to transform their business in an effort to maximize efficiencies. For example, as more companies leverage digital customer engagement tools, like chatbots, the need for basic customer service representatives is likely to decline. Overall, LIMRA believes technology will drive a change in the talent needs of insurers and distributors opening up new opportunities, especially for data scientists.
For more information on LIMRA’s predictions for 2018, members can read the full report. Reporters are invited to reach out to our media team for additional information.