HARRISON, N.Y.--(BUSINESS WIRE)--Transamerica Retirement Solutions released a report today titled, “Retirement Plans for Institutions of Higher Education,” that shows Higher Education institutions outperform the corporate sector when it comes to faculty and staff deferral rates and plan design practices that can generate successful retirement outcomes. Among those surveyed, the average deferral rate for faculty and staff is currently 13.4 percent.
The report focuses on Higher Education institutions that offer a 403(b) or Roth 403(b) plan and provides an in-depth view across plans and providers offering a level of detailed plan benchmarking that is not otherwise available.
The report, created from interviews with 90 plan sponsors in the Higher Education sector, found that on average 41 percent of Higher Education institutions offer automatic enrollment, and over half (54 percent) apply a default contribution rate of 5 percent or more.
The report also shows that Higher Education institutions’ retirement plans are evolving quickly. Many Higher Education plans include the industry’s newest retirement plan features– such as default contribution rates and automatic deferral increases – and their participants on average have access to more tools that help better prepare them for a secure retirement than their corporate counterparts.
“Higher Education institutions have made significant changes and improvements to their retirement plans over the past five to 10 years,” said Danny Carr, vice president and national practice leader of Higher Education for Transamerica Retirement Solutions. “Through plan design features like automatic enrollment and automatic deferral increases, plan sponsors are able to positively drive better retirement savings outcomes for their faculty and staff.”
The report projects that Higher Education retirement savings plans will continue to evolve, and that by the end of this year, usage of automatic enrollment will increase to 57 percent and usage of automatic deferral increases will more than double to 17 percent.
Higher Education Retirement Plans Evolve Over Past Two Years
Retirement plans offered by Higher Education institutions have experienced important shifts over the past two years. In fact, three-quarters (74 percent) of institutions have made some change to their retirement plan in the last 12 to 24 months.
Of the institutions that have already made changes, many have gone beyond plan maintenance and altered the structure of their retirement program. For example, on average 14 percent of Higher Education institutions have added a Roth 403(b) option.
Furthermore, two-thirds of institutions (65 percent) are planning to enact changes over the next year. These changes are focused on two areas: ongoing plan maintenance and structural changes of the retirement program itself.
“Significant change is clearly well underway for Higher Education institutions and their retirement plans,” said Carr. “We’re encouraged to see these institutions improving the potential for retirement security of their faculty and staff by adding important plan features like auto enrollment and escalation, hiring advisors and improving education.”
To request a copy of “Retirement Plans for Institutions of Higher Education,” email Transamerica at email@example.com.
About Transamerica Retirement Solutions
Transamerica Retirement Solutions (Transamerica) is a leading provider of customized retirement plan solutions for small to large organizations.
Transamerica partners with financial advisors, third party administrators, and consultants to cover the entire spectrum of defined benefit and defined contribution plans, including: 401(k) and 403(b) (Traditional and Roth); 457; profit sharing; money purchase; cash balance; Taft-Hartley; multiple employer plans; nonqualified deferred compensation; and rollover and Roth IRA.
Transamerica helps more than three million retirement plan participants save and invest wisely to secure their retirement dreams. For more information about Transamerica Retirement Solutions Corporation, please visit www.trsretire.com.
About the “Retirement Plans for Institutions of Higher Education” study
The Retirement Plans for Institutions of Higher Education study was fielded by Transamerica Retirement Solutions in December, 2012. Data were collected in December 2012 and the sample consisted of 58 public and 32 private institutions – the majority of which are four-year colleges or universities (83 percent of the sample). Most of these institutions (53) have fewer than 5,000 eligible employees – 82 percent of those with 5,000 or more employees are public. The sample is split almost evenly between those with a single provider (47) and those with multiple providers (43). Respondents have either sole decision-making (48 percent) or are members of a committee or board responsible for making retirement plan decisions. Of the 90 respondents, 38 partner with a retirement plan advisor or consultant.