Sponsors of 403(b) plans took steps forward in managing their plans over the past three years—despite a grueling economy and sweeping new regulation, according to a new survey of 403(b) plan sponsors from the Profit Sharing/401k Council of America (PSCA).
The survey, sponsored by the Principal Financial Group, also revealed that the vast majority (73%) of 403(b) sponsors held firm on making employer contributions to their plans and 40% of those that suspended matches are now restoring them.
“We saw real stability in the midst of volatility as 403(b) plans began restoring employer matches at the same rates as 401(k) plans,” says David Wray, PSCA president, about results from the just-released 403(b) Plan Response to Changing Conditions survey. “We also saw a significant increase in employee education as 403(b) sponsors helped employees focus on rebuilding. That may explain why these plans also report increased participation.”
Highlights from the survey include:
- More than a third (38%) of respondents report that participation rates have increased.
- More than half of respondents (50.8%) increased employee education and communication effortsover the last year.
- Nearly a quarter (22.6%) added investment advice.
- Nearly 16% of 403(b) plans that suspended the match plan to reinstate it within the next 6 months.
“While we continue to see growing similarities between 403(b) plans and 401(k)s, it’s significant to note that less than half of these 403(b) plans report having an investment committee,” said Aaron Friedman, national non-profit practice leader, The Principal. “This represents a real opportunity for financial professionals to add value by helping sponsors develop a committee and fiduciary processes.”
The 403(b) Plan Response to Changing Conditionssurvey—part of an ongoing series of PSCA surveys on 403(b) plans—reports on the 2009-2010 plan year experience of 599 403(b) plan sponsors from across the country.