News & Information

 

FEATURED PRODUCT

CCH's Law, Explanation and Analysis of Health Care Reform Legislation
Get full explanation and analysis of every aspect of health care reform legislation. These legislative changes will imminently impact thousands of employers, private insurance providers, and the Medicare and Medicaid programs. Pre-order today and save $20!

Learn More »

CCH® PENSION AND BENEFITS — 07/17/09

PSCA Releases Its First Survey On IRC Sec. 403(b) Plan Target-Date Funds

from Spencer’s Benefits Reports: According to a survey recently conducted by the Profit Sharing/401k Council of America (PSCA), nonprofit organizations are embracing target-date funds for their IRC Sec. 403(b) tax-sheltered annuities. The survey found that the majority of Sec. 403(b) plan sponsors offer target-date funds, and nearly one-fourth of organizations that do not currently offer such funds plan to do so within the next year.

The PSCA’s first 403(b) Target-Date Fund Survey, sponsored by the Principal Financial Group, revealed that more than half (51%) of the respondents offer target-date funds as investment options in their Sec. 403(b) plans. The study also found that the number of Sec. 403(b) plans using target-date funds as the default investment option more than doubled since 2007.

“Thousands of not-for-profit organizations in the U.S. rely on employee benefits such as 403(b) plans to compete for the best employees,” stated PSCA president David Wray. “This survey shows that 403(b) plans are evolving to more closely resemble 401(k) plans.”

The survey revealed widespread satisfaction with target-date funds among Sec. 403(b) plan sponsors. More than 58% of the respondents reported being either satisfied or very satisfied with their target-date funds. Items deemed most important by the respondents in developing a successful target-date fund offering include diverse asset allocation, quality of underlying investment managers, liability risk minimization, and cost control.

As further evidence of Sec. 403(b) plans’ evolution, the use of automatic enrollment in respondents’ Sec. 403(b) plans increased to 27.3% from 16.5% in the PSCA’s 2008 Sec. 403(b) plan survey. The PSCA noted that automatic enrollment use by 401(k) plans also has increased steadily over the past several years.

The PSCA’s 403(b) Target-Date Fund Survey was conducted in May and reports on the current plan practices of 144 Sec. 403(b) plan sponsors from across the country. To obtain the full survey results, visit http://www.psca.org.

Visit our News Library to read more news stories.