As a result of technological innovation and the overall changing retirement landscape, higher education institutions are facing challenges regarding their HR and benefits management practices. Specifically, higher education institutions are finding that they need to evolve their practices, including the way they approach their employee retirement plans, to account for transience in the workforce and the shift away from defined benefit plans.
Higher education institutions are increasing their focus on the retirement readiness of their employees and adopting practices more commonly seen in the corporate sector, such as increasing their adviser partnerships, according to a recent survey by Transamerica Retirement Solutions, Retirement Plans for Institutions of Higher Education.
Advisers have become an important driver in implementing automatic contribution increases a key method of steering participants to a successful retirement. The survey also indicates that thereare a number of practices that highlight the advisers value in the higher education sector, including:
Emphasis on employee education
- Sixty percent of higher education institutions that partner with an adviser monitor retirement readiness.
- Nearly two-in-three institutions working with an adviser also provide on-site participant education, ensuring participants have access to the communication and counseling they need to make informed decisions.
Managing fiduciary responsibilities
- Advisers are playing a growing role in helping committee members, especially within smaller institutions, with their fiduciary duties.
- Large institutions are more likely than smaller institutions to rely on their adviser to assist them with investment selection and plan compliance.
Streamlining of retirement plans
- In 2014, only 28% of higher education institutions characterized their plan as multi-vendor, compared to 48% in 2013.
- Just 13% of institutions added investment options to their retirement plans in 2014 versus 27% in 2013.
Growing increase in automatic plan features
- In 2014, plans with an automatic contribution increase rose to 23% versus 8% in 2013.
- Plans with automatic enrollment rose to 44% in 2014 versus 41% in 2013.
The broader retirement industry has been experiencing a number of these changes across various sectors for a number of years, but it is clear that rapid changes are now affecting the way that higher education institutions are approaching retirement readiness, ultimately opening more doors for the adviser community.
Wood is vice president and national practice leader of not-for-profit markets at Transamerica Retirement Solutions.
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