Plan Sponsors Changing Higher Education 403(b) Plan Designs

Plan sponsors of 403(b)s offered by institutions of higher learning are changing them in a variety of ways, Cammack Retirement Group reports. Cammack’s “Higher Education Retirement Plan Survey” identified the following changes by plan sponsors of these 403(b)s:

• More than 90% offer target date funds.
• 90% use an investment advisor, a 13 percentage-point jump since 2012 and a 19 percentage-point increase since 2011.
• 36% have instituted automatic escalation.
• More of these plans are instituting automatic enrollment.

There are some findings that are of concern:

• While use of automatic enrollment is increasing, just 22% have done so.

• A majority of plan sponsors do not limit the number of outstanding plan loans a participant may have.

• 65% of plans offer participants less than 50 ways to invest their plan funds.

The study looked at responses by more than 100 private colleges and universities, which together have 536,000 employees and 1,535,000 students.