Evolving landscape of 401(k)s

Smaller employers, in particular, need to be aware of the evolving landscape of retirement benefits for their businesses and the importance of offering a plan, since "only 48% of companies with less than 50 employees" offer a retirement plan, said Marc Fowler, Human Interest's Retirement Education Director. "It's estimated that 57 million Americans (nearly half of all workers) do not have access to an employer-sponsored retirement plan."

But that's changing, as federal and state mandates have bolstered efforts to help smaller employers. "Starter 401(k) plans [part of the federal SECURE 2.0 regulation] were created with small businesses in mind. These plans do not allow for employer contributions, have lower employee contribution limits (as compared to traditional 401(k) plans), allow for reduced recordkeeping requirements, thus reducing costs," said Ashley Walker, Senior Director of Retirement Plan Services at CoAdvantage.

Pooled employer plans, also a SECURE 2.0 provision, are another option for small and mid-size employers seeking to reduce fiduciary responsibilities and costs by sharing them with other employers.

More states are requiring employers without a 401(k) to enroll employees in a state auto-IRA program. So far this year, Vermont has a new auto-IRA program, Maine's program is awaiting the governor's signature and Rhode Island's state program is expected to launch in 2025.

Next generation of workplace retirement plans

"This next generation of workplace retirement plans—especially those which include ongoing planning and consultancy support—are a strategic asset that can help companies foster employee loyalty," said France.

"As the industry evolves, enhanced income solutions, plan design, advice, education and communication will all play pivotal roles in improving the retirement experience for American workers," said Michael Miller, Managing Director and Head of PGIM DC Solutions.

Related: Retirement plan design matters: How employers can assess the effectiveness of their 401(k)s

To move forward with retirement benefits, here are four extra retirement plan add-ons employees are seeking from employers:

Financial literacy. More and more employers have stepped up and have been offering financial wellness programs over the last year or so, but much more work needs to be done. Programs need to be more comprehensive and more personalized to be effective, most financial experts say. "When asked to rank their top three most helpful financial tools, respondents preferred the following: 49% a finance or budgeting class, 45% a financial literacy hub, and 44% a retirement savings calculator," said Marc Fowler, Human Interest's Retirement Education Director.

Lifetime income. The vast majority of workers now want their employers to offer them access to 'pension-like' lifetime income in their 401(k)s, according to a recent Nuveen survey. "Incorporating fixed annuities into 401(k) plans is a simple, effective and low-cost way to fill the retirement income design gap," said Brendan McCarthy, head of Retirement Investing at Nuveen. "With tools like target-date investments that include a fixed annuity component, sponsors can simplify savings and investing, as well as the ability to convert retirement savings into retirement income."

Managed accounts: "Through a workplace-managed account, said Lorianne Pannozzo, Head of Workplace Personalized Planning & Advice at Fidelity, "retirement savers have access to a personalized retirement savings account that is professionally tailored to the participant and managed to align with their unique circumstances and goals."

Digital engagement: Digital solutions are reshaping the retirement landscape—giving employees the tools, education, and personalized guidance they need. Advanced analytics are redefining retirement planning. Financial wellness and advisor platforms now use data to target diverse employee demographics, improving engagement, participation, and outcomes. "While AI is a powerful tool, the best approach is a hybrid one — leveraging AI for quick, data-driven insights while consulting human experts for major decisions and long-term strategy," said Moira Corcoran, a certified public accountant (CPA) and Finance Expert on Pearl.com.