Employers divided on DC plans' importance in hiring, retention – WTW

There's a wide gap in priorities between employers who view defined contribution plans as an important tool in retaining and attracting employees vs. those that do not, said the results of a Willis Tower Watson survey released Monday.

The gaps in responses between the two groups in areas such as enhancing engagement efforts and aligning plans with diversity goals was surprising, said Alexa Nerdrum, managing director for retirement, in an interview. The differences in priorities "are very, very telling," Ms. Nerdrum said. "I'm surprised they diverged so much."

The survey of 363 employers — clients and non-clients with a total of 8.4 million employees — asked respondents a series of questions about their DC plan strategy over the next two years.

Among sponsors that said a priority would be aligning their plans with diversity and inclusion goals over the next year, 48% said DC plans were an important retention/attraction tool for diversity and inclusion vs. 28% that said DC plans weren't an important tool.

There was a wide gap among employers when asked whether their priority was a strategy for enhanced engagement to retain employees. Sixty-two percent of the group saying the DC plan was an important retention/attraction tool cited the enhanced engagement strategy vs. 40% that said DC plans will not be an important tool.

There also was a big split when sponsors were asked about their priority for raising the importance of attracting new talent. Sixty percent of the group saying DC plans were an important tool cited the attraction strategy as a priority vs. 31% in the group that didn't view DC plans as an important tool.

The survey also looked at the willingness of employers to explore DC plan improvements to differentiate their plans in competition for talent.

When asked what they would do in the next two years, 60% of employers citing a strategy of differentiation said they are planning or considering integration of their DC plans with financial well-being efforts. Among all respondents, including this group, 39% said they were reviewing such a strategy.

Also, 48% of the seeking-to-differentiate group said they were reviewing targeted communication to specific segments of the workforce to influence employees' behaviors. Among all respondents, 31% said they would review this strategy.

"Sponsors are at a pivotal point to see where they need to differentiate" their DC plans to compete for talent, Ms. Nerdrum said.

The survey was conducted in January and February.