The impending brain drain that will result when baby boomers retire en masse has plenty of businesses biting their nails, but a report from the Plan Sponsor Council of America and sponsored by Principal Financial Group found nonprofits are expecting to lose at least 10% of their work force to retirement.
Non-profits have depended on their retirement plans instead of big salaries to attract the best talent, according to Bob Benish, executive director of PSCA. “We’ve seen 403(b) plans improve dramatically over recent years,” he said in a statement. “It is clear those plans will be increasingly important in the race for high performers, especially in higher educational institutions.”
Almost 70% of nonprofit firms surveyed by PSCA said they planned to replace the majority of retirees, but 38% are expecting it to be a challenge. More than half expect to lose between 10% and 20% of their workers over the next five years.
The survey highlighted the top challenges non-profit firms are expecting as they try to replace qualified, experienced workers.
- More than 42% anticipate an increased need for training.
- Similarly, 40% say there will be skill gaps in their work force.
- More than 38% say remaining workers will be overburdened as they pick up responsibilities of departing workers.
- Almost 34% say they will have to increase their use of technology to compensate.
Interestingly, less than 10% of respondents said they would outsource some of the responsibilities of retired workers to pick up the slack. Only 6% said they would cut some services to be able to work with their remaining work force. Thirty-three percent of firms said they didn't expect a major impact because they were preparing for the big hit to their work force.
Aaron Friedman, national tax-exempt practice leader for The Principal, noted that there were opportunities for advisors to add business from the nonprofit space, especially among large firms and higher education institutions. The survey found 20% of organizations with at least 500 employees, many of which are colleges and universities that experienced a hiring spike in the ’70s and ’80s, expect to lose one-fifth of their workforce to retirement in the near future.
“As a generation of academics nears retirement, financial professionals have another reason to focus on higher education as an opportunity to grow their business,” Friedman said. “Financial professionals who can help enhance plan designs—making plans more successful and therefore better appreciated by employees—stand to position themselves well in this burgeoning non-profit marketplace.”
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