Retirement Planning Now Top Focus for 403(b) Employee Education

Survey also finds gaps in cybersecurity awareness

DES MOINES, Iowa--()--For the first time ever, organizations that provide 403(b) plans reported that retirement planning, rather than increasing participation, is their top focus for employee education, according to the 12th annual 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA). The survey, which is sponsored by Principal Financial Group®, also found that plan sponsors could use additional support in communicating cybersecurity measures to employees – a growing concern during the COVID-19 pandemic.

“This year’s survey shows encouraging trends in retirement planning education and plan contribution rates in 2019,” said Hattie Greenan, director of research and communications at PSCA. “This is good news, particularly in view of the unique challenges this sector confronted in 2020.”

“The fact that more 403(b) plan sponsors are making retirement planning a priority part of financial education for employees is significant,” said Kevin Morris, vice president and chief marketing officer, retirement and income solutions at Principal®. “It suggests an increased focus on retirement outcomes for employees. Consultants and financial professionals are likely helping to drive this trend as they work with organizations and plan service providers to share educational resources on saving, budgeting and debt management.”

PSCA’s 2020 403(b) Plan Survey of nearly 400 non-profit organizations across the U.S. is the only independent 403(b) research report that delivers actionable data on trends among plan sponsors in the non-profit sector. This year the survey was conducted while many non-profits and their employees faced unprecedented hardships from the health and economic impacts of COVID-19.

Top trends

  • Retirement planning becomes top goal of providers’ plan-related education
    • More than a third of organizations now state that their primary purpose for providing plan-related education is retirement planning (34.8%), outpacing the previous years’ top goal of increasing participation
  • Plan sponsors could use additional support with cybersecurity education
    • Thirty percent of organizations initiated a cybersecurity awareness campaign related to retirement plans, and a third distributed email alerts about specific security issues in 2019
  • Higher employee participation and plan sponsor contribution rates
    • More participants contributed to their plan this year, 76.6%, up from 72.0%
    • Plan sponsor contributions up to 6.3%, from 5.5%
    • Participants now contribute 7.2%, up from 6.6%

Retirement Planning Top Goal of Education for the First Time in Survey’s History

More than a third of organizations state that their primary purpose for providing plan-related education is retirement planning (34.8%). This is the first time the primary goal has been anything other than to increase participation, though it wasn’t far behind, at 33%. Increasing appreciation for the plan – perhaps reflecting previous emphasis on that aspect in communications was a distant third at 12.2%.

The most common ways employers educated participants was through e-mail (90.4%), Intranet/Internet sites (48.7%), enrollment kits (40.9%), and providing one-on-one assistance with a financial professional (40.0%).

Cybersecurity education a potential opportunity

Though the survey covered a pre-pandemic/work from home period, the results revealed an opportunity into increase education and communication of cybersecurity best practices to employees – this is a trend to watch as we see continued focus in this area.

“With an increasing number of employees working remotely, all aspects of cybersecurity are top of mind for employers, yet only one in three employers initiated cybersecurity communications or awareness to employees,” said Morris. “Working with a financial professional or consultant who can promote the importance of cybersecurity education and features can help protect access to employees’ personal information and financial savings.”

Higher participation and contributions

With the increased emphasis on retirement readiness, and the support of employers, employees of non-profits may be more likely to achieve better retirement outcomes than before.

Plan sponsor contribution rates rose in the last year to an average of 6.3% of pay (up from 5.5% a year ago and 4.7% in 2017). Significantly, in the last two years, employer contributions have increased 34%. The survey also found an increase in participant contributions, which now average 7.2% of pay. The increase in participant contribution rates is helped in part by higher default deferral rates and automatic escalation of contribution rates. Nearly half (45.1%) of plans now use a default deferral rate higher than the traditional level of 3%, up from 37.7% last year. More than half (51.1%) of plans with automatic enrollment automatically escalate that default deferral percentage over time.

“While it is encouraging to see steady incremental improvements in retirement savings rates, we know that the pandemic has put a lot of pressure on organizations and their employees,” said Greenan. “Hopefully the solid foundation provided by these strong starting points, along with the expanded efforts in retirement planning education, will help employees stay on track to meet their goals.”

About the PSCA 403(b) Plan Sponsor Survey

PSCA, part of the American Retirement Association, conducted its twelfth annual survey of 403(b) plan sponsors in the spring of 2020. The survey received responses from 393 non-profit organizations that currently sponsor a 403(b) plan for employees and range in size and industry from small community-based organizations to large hospital and university systems. For more information, visit

About Principal®

Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals—offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, member SIPC and/or independent broker/-dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. PSCA and Hattie Greenan are not an affiliate of any company of the Principal Financial Group.

Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.

About the Plan Sponsor Council of America

The Plan Sponsor Council of America (PSCA), part of The American Retirement Association, is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans.

Release Summary

Plan Sponsor Council of America and Principal announce findings from latest 403(b) retirement plan survey.