Transamerica Survey Finds Higher Education Institutions Turn to Their Retirement Plan service Provider to Help Address Unprecedented Challenges

Transamerica today revealed the latest report of retirement plan trends for institutions of higher education. Survey results provide an inside look into the challenges institutions face in helping faculty and staff prepare for retirement. 

The COVID-19 pandemic has impacted retirement plans beyond the availability and usage of loans and COVID-19 related distributions. Nearly three out of five institutions report increased demand for investment and in-plan retirement income opportunities and one in four report an increased need for access to professionally managed accounts. More than ever, higher education institutions are relying on their retirement plan partner to offer strategies to help participants plan for a secure retirement.

Key findings include:

• Respondents say that saving for healthcare expenses is their participants’ most significant concern (66%)—even higher than retirement preparedness (61%). 
• Nearly half (49%) offer retirement education programs designed to provide faculty and staff with health-related tools and coaching in the interest of reducing future healthcare costs.
• Almost half (45%) of respondents indicated they are increasing spending on IT infrastructure. 
• Income replacement ratios have become higher education institutions’ favorite indicator of plan success, more than doubling since 2016.
• Use of an advisor/consultant increased to 85% in 2020 from 40% in 2016, and institutions are meeting virtually with their advisors more frequently—quarterly or even monthly. 
• Of those surveyed, 66% offer access to a defined benefit plan (as opposed to only 17% of private-sector employers according to the 2018 National Compensation Survey by the Bureau of Labor Statistics).

Comparing levels of “extreme concern” from 2016 to 2020, higher education institutions today appear more anxious regarding faculty and staff who may be unaware of how much money they will need in retirement and offering them the right services as they near retirement. Their concern about these two subjects has doubled since 2016.

“Higher education institutions are evaluating their retirement benefits packages to address challenges and identify opportunities,” said Wendy Daniels, Vice President, Not-for-Profit Practice Leader for Transamerica. “This report gives context to how peer institutions are helping faculty and staff prepare for a secure financial future. Transamerica is focused on the connection between wealth and health, and this report highlights the importance of understanding this intersection when developing successful retirement strategies.”

This study is the fifth survey conducted by Transamerica Retirement Solutions to help plan sponsors and their financial advisors set benchmarks and evaluate opportunities for enhanced service offerings.