Significant Retirement Trends in Higher Education By: Brodie Wood
Each year, Transamerica Retirement Solutions conducts a nationwide survey of higher education institutions regarding trends in their retirement programs. We publish the results of this study in an effort to help these organizations enhance the retirement benefits they offer to faculty and staff, and to allow them to benchmark their programs across the industry. 

In our most recent survey, “2017 Retirement Plan Trends for Institutions of Higher Education,” we uncovered many key findings to help higher education plan sponsors foresee and address potential challenges. The past year has been a tumultuous time for higher institution plan sponsors, with multiple lawsuits filed against prestigious institutions such as Columbia University, Cornell University, Johns Hopkins University, Northwestern and New York University, among others. In some cases, plans were accused of excessive fees. In others, a wide range of practices were questioned, such as the selection of investment options and liquidity provisions for stable value funds. 

This environment has caused many higher institutions to examine their plan documents, plan provisions and fiduciary duties as a plan sponsor. As a result, the study indicates that a greater number of higher education institutions are seeing the value of hiring consultants and financial advisors to offer guidance and plan design consulting. Over 76% of higher education retirement plans now have an investment policy statement in place. 

Regarding plan design trends, many higher education institutions are now broadening eligibility, which is good news for many employees, including part-time employees. In addition, there is a significant increase in the number of plans offering automatic enrollment. However, this positive improvement is somewhat muted by the fact that many institutions are only offering this feature to new faculty and staff. One key retirement plan trend in the corporate market that has not caught on in the Not-for-Profit market is automatic deferral increases. This is unfortunate as many in the retirement industry view this feature as being an important element to helping people save more for retirement. 

Another top trend involves moving from a multi-vendor arrangement to a single plan provider. With many firms offering fully bundled retirement plan services, this can be an effective way for plan sponsors to manage costs, enhance plan administration, and reduce legal risk. 

Finally, as higher education plan sponsors look to the future, institutions are moving towards 401(k) plans in favor of 403(b) plans, which are in decline. More plan sponsors are focusing on accepting fiduciary status under ERISA, and there is a trend to move away from individual contracts. With the increased adoption of automatic plan features, higher education plan sponsors are becoming more focused on helping their faculty and staff invest more for retirement, with an eye towards increasing engagement and education about financial wellness in the process. 

It is more critical than ever for plan sponsors to work closely with their retirement plan providers, consultants, advisors and attorneys to regularly evaluate plan design, perform routine due diligence, and communicate with faculty and staff to help create a competitive, valuable and cost-effective retirement benefit program. 

About The 2017 Retirement Plan Trends in Today’s Higher Education Market

Retirement Plan Trends in Today’s Higher Education Market is an annual study conducted by Transamerica. The study presents insight on current issues that impact defined contribution and defined benefit plans of higher education institutions. The report provides analysis to guide higher education plan sponsors and their advisors as they benchmark their organizations in many areas of plan design and management, in order to critically evaluate opportunities for improvement.  The survey was comprised of 83 questions and was conducted online between March and September 2016. A total of 249 higher education plan administrators responded to the survey. This material is being provided for informational purposes only. It should not be viewed as an investment recommendation by Transamerica for customers or prospective customers. Customers seeking advice regarding their particular investment needs should contract a financial professional.

About Transamerica

With a history that dates back more than 100 years, Transamerica is recognized as a leading provider of life insurance, retirement and investment solutions, serving millions of customers throughout the United States. Recognizing the necessity of health and wellness during peak working life, Transamerica’s dedicated professionals work to help people take the steps necessary to live better today so they can worry less about tomorrow. Transamerica serves nearly every customer segment, providing a broad range of quality life insurance and investment products, individual and group pension plans, as well as asset management services. In 2016, Transamerica fulfilled its promises to customers, paying more than $7.2 billion in insurance and annuity benefits, including return of annuity premiums paid by the customer. Transamerica’s corporate headquarters is located in Baltimore, Maryland, with other major operations in Cedar Rapids, Iowa. Transamerica is part of the Aegon group of  companies. Based in the Netherlands, Aegon is one of the world’s largest providers of life insurance, pension solutions and asset management products, operating in more than 20 markets worldwide. For the full year of 2016, Aegon managed $784 billion in revenue generating investments. For more information, please visit www.transamerica.com.

To learn more about this study or Transamerica, you may contact Robert Goldman, Regional Vice President, at Robert.Goldman@transamerica.com or (914) 627-3333 or Brodie Wood, Senior Vice President, at Brodie.Wood@transamerica.com or (720) 482-8883.
Brodie Wood

Brodie Wood is Senior Vice President, Not-for-Profit Markets. Transamerica is a leading provider of customized retirement plan solutions for organizations of all sizes. Transamerica helps more than three million participants save and invest wisely to live the life they want.

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