They don’t call them self-directed for nothing.

The shift from traditional defined benefit pension plans to defined contribution plans has placed greater autonomy on workers for their retirement plans' fates.

But does that mean workers should be exclusively responsible for their own retirement investing outcomes?

New research from Cogent Reports, a division of Market Strategies International, shows the answer to that question varies among stakeholders and sponsors of different size, and that different perspectives on who bears responsibility for retirement outcomes could affect how sponsors design options for savers.

Among micro plans, which Cogent classifies as having less than $5 million in assets, and small plans, with $5 million to $20 million in assets, four in 10 sponsors say ownership of individual outcomes falls squarely on the shoulders of participants.

Only 30 percent in each segment said they, the employers, were most responsible for outcomes, and a quarter in each segment place the onus on record keepers.

As plans get larger, more employers say it is their responsibility to get participants adequately prepared for retirement.

One-third of midsized plans with assets between $20 million and $100 million say sponsors bear the most responsibility, compared to 31 percent that said individual workers were primarily responsible.

For large plans with $100 million to $500 million in assets, 37 percent of sponsors said they are primarily responsible for outcomes, compared to 22 percent that said the job falls to participants.

And in mega plans, with assets greater than $500 million, 41 percent of sponsors—more than in any other size segment—said they were primarily responsible prepping participants for retirement. Three in 10 of the largest sponsors still perceive the responsibility as participants’.

Read on for three trends seen among retirement plan sponsors:

Photo: Getty

1. Auto-enrollment flat; auto-increase declining

In spite of another year of growing awareness that the country’s workforce across generations is largely under prepared for retirement, the adoption of automatic enrollment has been flat in 2016, according to Cogent.

Among all plan sizes, only three in 10 plans have adopted automatic enrollment.

Large plans have adopted the feature most prevalently, at 51 percent, while only 27 percent of micro plans use the feature. The biggest mega plans only use automatic enrollment at a clip of 42 percent, less than midsized plans (44 percent) and a bit more than small plans (39 percent).

The number of sponsors that say they are likely to adopt automatic enrollment in the next year is lower across the board than sponsors that say they are neutral or flat out unlikely to adopt the feature.

For sponsors of all sizes that do not automatically enroll their workers, only 17 percent say they plan to do so in the coming year.

Since 2014, the use of automatic increases to deferral rates and automatic account rebalancing features has significantly decreased, Cogent’s research shows.

This year, only 19 percent of sponsors of all sizes report using the features, compared to 26 percent two years ago. Individually, the adoption of auto-increase has fallen from 17 percent to 14 percent in that time.

2. Fewer sponsors offering a match

What is most concerning to Cogent’s researchers is that fewer employers are offering a contribution match from 2015.

For all plan sizes, only half of sponsors offer a match, down from 57 percent in 2015. Matches were down across all plan size segments. Small plans offer matches at a rate of nearly 60 percent, compared to mega plans, which offer matches at a rate of 41 percent, the lowest rate among all plan sizes.

“Decreasing the use of these features can be related back to the most commonly cited primary focus of plan sponsors’ need to cut fees,” Cogent’s report says.

“In a cost-constrained environment, plan sponsors may be less likely to offer auto-features if they result in higher total plan costs,” according to the report.

3. Most sponsors offering some form of advice

Four out of five sponsors make available some form of investment advice.

Direct access to financial advisors was the most common channel for advisory services, with 46 percent of all plans offering one-to-one human advisory services. The small plan market offers access to advisors with the greatest frequency, at 52 percent.

Automated online investment advice offered through the plan provider is offered by 32 percent of all plans, with large plans offering it at the greatest rate, at 47 percent.

“Interest in online investment models lags in in-person advice,” noted Cogent. “However, this finding may change in the coming years as robo models gain wider acceptance. It is clear that a more personalized approach to investment advice for plan participants is being taken seriously by plan sponsors, yet time will tell which modes of advice delivery become the most popular.”

Instant Insights /

Whose job is it to get 401(k) participants ready for retirement?

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