Unlike other industries such as travel and hospitality, which suffered sudden and dramatic impacts to their bottom lines, the defined contribution (DC) retirement plan market has been a unique microcosm in the backdrop of the ongoing COVID-19 pandemic. Roughly one year out from massive financial market collapses and an unimaginable number of human lives lost, the DC industry stands remarkably unscathed.
Even as plan sponsors waived fees for hardship withdrawals and loans, the vast majority of plan participants resisted the urge to pull money out of their 401(k)s. They appear to be taking market volatility as par for the course, playing the long game with their investments. According to leading recordkeepers like Fidelity, Prudential Retirement and Alight Solutions, coronavirus-related withdrawal rates held steady until rising in the fourth quarter of 2020, right before the CARES Act provision expired. Couple the expiration with a nationwide surge in new cases, and it suggests the increased activity in Q4 was predominantly necessity driven.1
One might even go as far as to posit that the pandemic pushed the DC industry to rally together—buoyed by increased virtual access to retirement plan advisors, company service reps and automated advice—under the unifying goal of ensuring financial security and happy and healthy retirement for millions. So what, in fact, has changed?
While the shifts in the DC market have not been as dramatic as once feared, an important yet subtle evolution is underfoot and rooted in caring for one another by enhancing service and support. In a new white paper from Cogent Syndicated, we reflect back on some of the most telling data collected in 2020 from the top three stakeholders in the DC plan market: plan sponsors, plan participants and plan advisors.
There were specific impacts the COVID-19 pandemic had on employer sponsored retirement plans (ESRPs) thus far, and we are have guidance to offer firms on how they can better partner with each respective party in the DC space as the industry settles into a new era of everyday living and investing.
Click below to download the full white paper for more robust findings and proprietary data.
1 “Secure Act Virus-Related 401(k) Withdrawals Climbed in Late 2020,” Ignites, January 11, 2021.