Sponsors Feel Strong Sense of Concern, ResponsibilitySponsor concern about workers’ retirement planning stretches across the spectrum of retirement financial needs. Only 43 percent of corporate retirement plan sponsors are confident that their workers are saving enough now to get the monthly income they want in retirement; by contrast, about 67 percent of workers are confident that they are saving enough. Four in 10 sponsors think the greatest financial challenge their employees will face is “not having enough money to last through retirement.” Sponsors’ view of their responsibility outstrips even what workers themselves believe it to be. About two thirds of sponsors strongly agree an employer should educate employees on the realities of longevity in retirement, compared with just 25 percent of workers. Similarly, four in 10 sponsors – but just 22 percent of workers – strongly agree they should warn employees if they are not saving enough money to last through retirement. Income Options Not Yet Widely Offered About three quarters of sponsors – as well as 89 percent of workers - also believe that employers should provide employees with secure income generating options in their workplace retirement plan. Nearly nine of 10 (86 percent) sponsors agree (and 20 percent “a great deal”) that their participants would benefit from an in-plan guaranteed income solution. Yet, just 11 percent of DC plan sponsors say they offer an in-plan guaranteed income solution, and of the companies not offering this solution, just 19 percent say it is likely that they will add it to their plan in the next 12 months. Nearly half of sponsors not yet offering an income solution said their biggest hurdle was not having the time to “conduct proper due diligence.” “As traditional pensions wane, American retirees face a growing retirement income gap, and there is growing belief among participants and sponsors alike that DC retirement plans can – and should – help fill the gap,” said Castille. “Removing the hurdles to delivery of secure income must be a priority for the entire DC community.”
Providing Support for the “Accumulation Phase”Sponsors are actively moving to provide new plan options for DC’s “accumulation phase,” in particular, the target date fund (TDF) – which automatically rebalances and reallocates assets over time to become more conservative and lower the chance of losing money as the worker nears planned retirement age. Eight of 10 sponsors say they offer TDFs. Of these, 18 percent say they implemented a full plan re-enrollment, under which all participants were defaulted into a TDF or similar investment from their current allocations. Nine of 10 sponsors say that participants responded positively to the re-enrollment. “Worker appreciation of the TDF approach shows the value of plan innovations that tangibly support good outcomes – in this case, better savings,” Castille said. Need to Build Participant Appreciation of DC’s Value Though big strides have been made in focusing DC on what participants most require for effective planning, the polls also suggest that sponsors need to redouble efforts to build worker appreciation of the value of key plan features. For example, about seven of 10 sponsors think their plan has been helpful in warning employees if they are not saving enough money to last through retirement, but just 41 percent of workers share this view. Sponsor and worker views of plan helpfulness diverge as well on such key areas as educating employees on the realities of longevity in retirement (78 percent vs. 52 percent), and helping employees “get through retirement, not simply reach it” (71 percent vs. 50 percent). “The DC system has come a long way, but sponsors and workers alike recognize that DC is still an evolving proposition and that there is much still to do before DC fulfills all its promise,” he said. “In particular, we need to help both sponsors and workers take advantage of emerging products that can help focus DC on solving retirement’s most urgent problems – especially the delivery of secure, life-long retirement income.”
For more information on the BlackRock survey, please visit www.BlackRock.com/RetirementSurvey .About BlackRock BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At March 31, 2012, BlackRock’s AUM was $3.684 trillion. BlackRock offers products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares ® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions ®. Headquartered in New York City, as of March 31, 2012, the firm has approximately 9,900 employees in 27 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia, and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com. About BlackRock Defined Contribution Retirement is harder than ever before. That’s why many of the world’s largest DC plans trust BlackRock with their participants' retirement futures. As an independent, global DC investment-only provider, BlackRock provides a breadth of capabilities and depth of knowledge across asset management, plan design, client engagement and participant communications. Our dedicated DC professionals work with plan sponsors, consultants and financial advisors to share the best thinking from across the globe and objective insights on the ever-evolving challenges of this new world. BlackRock aims to help you bring clarity to the most complex retirement plan objectives, so that together we can deliver the best possible outcomes for participants. For additional information, visit www.blackrock.com/dc. About Boston Research Group BRG is a strategic market research and consulting firm that specializes in the financial services and employee benefits industries. The firm conducts projects dealing with both strategic and tactical marketing issues, including loyalty and satisfaction, market segmentation, brand assessment, product development, sales processes, and distribution strategies. BRG focuses on applying market research information, collected and analyzed using qualitative and quantitative data collection techniques and methodologies, to provide solutions for marketing-related challenges. The firm has extensive experience studying DC participants, plan sponsors, retirement plan advisors, and search consultants. BRG has conducted the leading syndicated plan sponsor, participant and advisor studies since 2000. The BlackRock study was directed by BRG’s president, Warren Cormier, who is co-founder of the Behavioral Finance Forum along with Dr. Shlomo Benartzi, a pioneer in participant behavior.
The opinions expressed are as of May 3, 2012 and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.Call 1-855-BLK-8880 for more information. Visit blackrock.com or iShares.com or contact your financial professional for a prospectus or summary prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal ©2012 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, iSHARES, INVESTING FOR A NEW WORLD, are registered and unregistered trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.