Dive Brief:
- Volatility, benefit costs and regulatory compliance have U.S. employers that sponsor retirement plans such as 401(k)s very concerned, according to a new survey.
- Willis Towers Watson's Retirement Plan Governance Survey of more than 300 U.S. employers found that 53% of respondents ranked investment volatility as one of their top three current retirement plan risks, while 49% ranked retirement benefit costs as a top concern.
- In a related area, a staggering 31% of employers had their retirement plans audited by the federal government over the past two years, reflecting why 47% overall worry about regulatory compliance.
Dive Insight:
In the case of regulatory compliance, larger employers (25,000 employees or more) reported an even higher audit rate at 50%, though the survey also found that very few employers (2%) have faced fee and stock drop lawsuits over the past two years.
David Speier, senior retirement consultant at Willis Towers Watson, explained that the fact that one in three retirement plans have been audited should send a wake-up call to many plan sponsors. He suggests that there are improvements to be made and that priority be given to a proactive approach "of plan operations and compliance processes."
To bear that out, the survey found that 44% of plan sponsors have not conducted an operational compliance review of their defined benefit (DB) plans in the past two years, while 42% have not conducted a similar review of their defined contribution (DC) plans. The reason? About a third of respondents cited limited budgets and resources.