Happy Days are Here Again (?)
Defined Contribution Participant Perspectives: First in a Series
When it comes to the big economic picture, active DC participants today are happier and more secure than at any point in the seven-year history of these measurements.
The proportion of participants expecting a recession has declined steadily over the years; at 16% this level is about half of what it was in 2010. As well, the share of participants expecting robust economic growth (defined as three percent a year or more) has almost tripled, to 17%. This pattern obtains across participants in all types of plans (401(k), 403(b) and 457) and is arguably most pronounced in the 457 community.
Overall Economic Expectations
Trend by total DC
Perceived job security is also off the charts with the proportion of participants concerned about losing their jobs declining from 38% in 2010 to 22% today. The share of participants “not concerned at all” about their jobs has almost doubled, to 43%, again with 457 participants feeling the most secure.
Job Security
Trend by Total DC
And the proportion of active DC participants considering delaying retirement is at an all-time low, at 28% fully ten points below 2015. In the critical pre-retirement age stratum (50 to 64) this proportion has collapsed from more than half (52%) in 2010 to exactly one-third today.
So what could possibly go wrong? As we’ll document in the weeks ahead, atmospherics are up but personal experience isn’t keeping track—an unusual (and possibly temporary) disconnect. One clue: although the S&P 500 is up about a quarter since the 2015 measurement, self-reported DC portfolio value is only up about five percent (and that includes ongoing contributions, of course). Participants may be telling us that they missed the party.
About the Research
Voice of the Defined Contribution Participant (VDP) studies were launched in 2010 by Brightwork Partners LLC; Brightwork was acquired by NMG Consulting in 2017. Findings are based on selected VDP waves carried out between 2010 and 2017. These studies are conducted online among nationally representative samples of active 401(k), 403(b) and 457 participants.
For more information, contact:
Merl W. Baker, 203.487.2000; Merl.Baker@NMG-Group.com
Where to now?
Shape your thinking: The NMG Consulting proposition.
Our Library of Insights: Trusted by industry leaders.
Follow NMG Consulting on LinkedIn and be the first to read our latest insights and company news.