Defined Contribution Industry Survey Highlights Recordkeeper and Plan Sponsor Issues in Light of Pandemic

WASHINGTON, April 22, 2020 (Newswire.com) - ​The SPARK Institute and the Defined Contribution Institutional Investment Association (DCIIA) Retirement Research Center announced today the results of a survey of SPARK members (including recordkeepers and other service providers) on the pandemic and implementation of the CARES Act; 21 firms responded.

Recordkeepers are adjusting their processes to accommodate coronavirus-related distributions and two-thirds are accepting self-attestations from participants that meet the eligibility requirement. Over 80% of those surveyed have already updated their systems and procedures to accommodate the CARES Act. The volume of distribution requests and questions is up significantly. Still, more than two-thirds of the industry is meeting their Service Level Agreements.

None of the surveyed companies has plans to lay off or reduce staff, but many have imposed hiring freezes on certain business units. Ninety-eight percent of the industry is now working from home, up from 20% in January. The transition to working from home caused minimal disruption since the industry has had work-from-home procedures in place for more than a decade.

Those surveyed indicated that according to their data, approximately half of plan sponsors are considering reducing employer contributions until the crisis is over. Recordkeepers and plan sponsors are discussing alternative tactics to help address plan expense and cash flow concerns. Additionally, many plan sponsors previously considering an RFP process have decided to put that process on hold. With so many of their employees now working from home, some plan sponsors are concerned with managing paperwork and required document signatures, payroll and staffing issues, and a lack of necessary technology infrastructure.

Unlike in the 2009 financial crisis, most participants are not shifting their investments, but instead are looking for loans or hardship withdrawals. For those participants that are moving assets, the shift is toward fixed-income products.

“Our industry recognizes the need many Americans have for access to their savings as they face these challenging times, so our industry is working diligently to provide that access to workers,” said Tim Rouse, Executive Director of the SPARK Institute. “When this crisis passes and Americans can turn their attention to saving for their retirement, these same firms will be there to once again support these workers,” he added.

“Many of us are experiencing echoes of the 2008-2009 crisis, although this time is markedly different both in the origins of the crisis and the rapidity of the economic fallout,” said Lew Minsky, President and CEO of DCIIA. “DCIIA remains committed to working with plan sponsors and the broader retirement savings industry in highlighting ways to close the retirement savings and security gap, an issue that is being highlighted now more than ever as the pandemic reveals systemic gaps in emergency savings and other financial wellbeing issues.”

CONTACT:

Karen Witham, DCIIA, [email protected], 202-367-1124

Tim Rouse, SPARK Institute, [email protected], 508-838-1919

Source: DCIIA