Positivity Widespread Among 457 Plans
Employers offering 457 plans demonstrate a great degree of positivity about the plans and about their role in helping employees prepare for retirement, according to a recent study.
In its recent survey of 457 plan sponsors
, American Century Investments sought information about perceptions of their roles, the behaviors of employees and the expectations of partners. Researchers found much positivity about the plans and employer involvement.
Sponsors of 457 plans generally believe in automatic enrollment and automatic escalation and are more likely to implement them, American Century Investments found. A strong majority believe their participant education efforts are working, and the vast majority work with an advisor or plan to soon.
The study found that the 457 plan sponsors they studied are more confident and positive about some aspects of providing retirement benefits and services than their counterparts that offer 401(k) and 403(b) plans. For instance:
- auto features made the 457 sponsors more confident than employers that offer 401(k) and 403(b) plans that their employees will be able to prepare for retirement; and
- 91% said that their participant education efforts are very or extremely effective, while 46% of those that offer 401(k)s and 403(b)s do.
Ninety percent of the employers studied that offer 457 plans said they are engaged with an advisor; 80% of those that said they do not expect to do so in the near future, twice the number of 401(k) and 403(b) plan sponsors that have such an expectation.
The 457 plan sponsors said that investment selection and monitoring are the most important function their advisor performs.
Based on the results of their research, American Century Investments suggests that when they consider working with 457 plans, investment professionals “recognize the importance of paternalism and purpose, acknowledge their concern and provide metrics to evaluate effectiveness.”