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T. Rowe Price: Commitment To Employees' Retirement Security Goes Beyond Working Years For Many Larger 401(k) Plan Sponsors

Survey finds that plan sponsors agree that they have a responsibility to help participants achieve retirement preparedness 

Target date funds are widely used with high satisfaction



In a new study, “HR Perspectives: A Survey of Larger 401(k) Plans” T. Rowe Price found broad-based commitment to workers’ retirement security based on the attitudes and actions of retirement plan sponsors. In addition to taking responsibility for retirement preparedness, plan sponsors are taking steps to offer a number of automatic programs, matching contributions, stretch matches, and more to drive successful retirement outcomes.   

The study reveals the views of human resources and benefits professionals administering 401(k) plans with assets of $100 million to over $1 billion. It took place in late 2016 and is based on telephone and online surveys of a nationally representative sample of 269 executives.



Anne Coveney, senior manager of Retirement Thought Leadership;

“Plan sponsors’ behaviors and attitudes clearly indicate the seriousness with which they take responsibility for the retirement security of their plan participants. More than a savings plan during working years, the 401(k) is increasingly seen as a plan that needs to serve employees during their retirement.”



401(k) plan services extend into retirement 

More than 10 years after the passage of the Pension Protection Act (PPA), the 401(k) plan objectives now reach beyond the savings phase. And 41% say helping retirees manage income from their 401(k) is a major strategic goal for their plan.


Retirement preparedness metric is correlated with higher automatic programs usage  

Almost half (48%) of plan sponsors say they have a formal metric to track the retirement preparedness of their employees. Those who are tracking progress toward retirement preparedness report higher usage of various automatic programs, including auto-escalation used by 63% of those with a metric versus 52% of those without, and periodic enrollment of non-participating employees is used by 55% with a metric versus 41% without.


Plan providers (recordkeepers) are the primary source of retirement preparedness metrics

Of the 48% who use a formal metric, 52% indicate that the metric was provided by their recordkeeper, 25% report using a proprietary metric that was developed independently by their company, and 21% sourced the metric from their consultant or adviser.  


Plan sponsors are positive about recent progress 

Almost two-thirds (64%) feel better about 401(k) participant retirement preparedness compared with two years ago. But the third-ranked major 401(k) plan goal is enabling employees to retire at their preferred retirement date, which was indicated by 64% of sponsors. This suggests that the commitment to retirement preparedness is not just about participants. It also supports workforce management goals of achieving timely retirement of older workers.


Other plan features

Matching contributions are offered by 89% of plan sponsors; of that 89%, 51% offer a traditional matching formula and 38% offer a stretch match to encourage higher contribution rates.


Target date funds are widely offered (83% of plan sponsors) and with high satisfaction; 96% to 98% are satisfied with the various types of target date funds with about 60% rating their satisfaction as very satisfied. Target date funds serve as the qualified default investment alternative (QDIA) for 88% of plan sponsors that offer target date funds. About half of plan sponsors that offer target date funds report that target date funds are proprietary funds managed by their recordkeeper.       


Despite plan sponsors’ progress with helping employees’ retirement preparedness, 70% say that leakage of retirement plan assets (due to defaults on plan loans, hardship withdrawals, and cash-outs) is a major or minor problem for their plans.

To address this problem, plans that indicate a major/minor problem with leakage are offering various programs, such as:

  • A financial wellness program to help participants manage their day-to-day finances more successfully but that does not include individual financial counseling (58%)
  • Education services that project the impact to account balances at retirement due to leakage (53%)
  • Debt management tools and services (47%)

For more information please visit T. Rowe Price’s Retirement for All website.




This research is based on telephone and online interviews with a representative national sample of 269 401(k) plan sponsors with $100 million or more in assets under management. Respondents were executives in human resources, employee benefits, plan administration, and benefits administration responsible for selecting, evaluating, or monitoring providers, services, and investments for their organization’s 401(k) plan. Interviews were conducted between September 8 and November 15, 2016.


Founded in 1937, Baltimore-based T. Rowe Price Group, Inc., is a global investment management organization with $861.6 billion in assets under management as of March 31, 2017. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit, Twitter, YouTube, LinkedIn, or Facebook.