A new analysis reveals that defined contribution (DC) plan sponsors in the United States are placing an increasing emphasis on financial wellness and cost efficiency. To that end, many are actively exploring innovative plan designs and advanced investment solutions such as pooled employer plans (PEPs) and artificial intelligence (AI) strategies.
That’s according to the inaugural “Voice of the Plan Sponsor: 2025 Defined Contribution (DC) Practices” from Mercer, a Marsh McLennan company and leading human resources consultancy. The research was conducted in July via an online survey of 225 decision-makers at U.S. single-employer DC plans.
When asked about their top three priorities for the coming year, plan sponsors reported a near equal focus on financial wellness for participants (39%), followed closely by ensuring regulatory compliance (37%) and reducing costs (36%) in their plan.
“Our research reveals that employers are walking a tight rope between balancing cost pressures, regulatory risks and participant expectations, while addressing their own business needs in an environment of increasing regulatory scrutiny,” Holly Verdeyen, defined contribution leader for Mercer US, said in a statement.
Cost-cutting also was a central theme among respondents. Seventy percent of employers surveyed are either taking or planning to take action to lower their plan costs. Of the plan sponsors looking to reduce costs, more than half (54%) reported that they were currently changing plan design characteristics or would consider doing so.
Implementing AI strategies
As seen in many parts of the broader economy, AI is viewed as a high-impact technology by DC plan decision-makers, with 44% stating that the technology will have the greatest impact on the success of their plan over the next three to five years. In fact, two-thirds (67%) of plan sponsors reported that they are actively exploring or currently implementing AI or advanced analytics into their DC plan strategy, while 26% are interested but not actively exploring these strategies.
“We expect that AI will transform retirement plans and participant experiences by enhancing investment management and enabling plan sponsors to meet participants where they are, tailoring advice and communications to their unique situations,” Verdeyen said. “With AI, plan sponsors can use predictive analytics and real-time monitoring to respond to market changes, and AI-powered education and personalized advice can improve participants’ financial literacy.”
Greater focus on PEPs and MEPs
The survey also highlighted increasing interest in PEPs and multiple-employer plans (MEPs), which offer a more comprehensive outsourcing solution by consolidating fiduciary and administrative responsibilities under a single pooled plan provider. The shift reflects a heightened desire among sponsors to provide competitive financial wellness benefits to their employees in a cost-effective manner.
When asked about which cost-saving measures plan sponsors would consider implementing, 29% reported they are currently using or considering a MEP or PEP specifically as a way to lower plan costs. More broadly, 67% of plan sponsors said they are considering switching to a MEP or PEP or may consider it in the future.
“PEPs and MEPs offer employers a way to lower plan costs and fees while providing strong fiduciary oversight and administrative efficiencies,” said Preston Traverse, Mercer US’s DC mid-market leader. “Pooled employer plans strike a happy medium for employers of all sizes between offering a comprehensive and cost-effective retirement plan and optimizing internal resources to focus on the core pieces of their HR delivery.”
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