Results of a new survey suggest that the Pension Protection Act is having a major impact on retirement plans in the healthcare sector. The Retirement Plan Trends in Today's Healthcare Market 2007survey found that 85 percent of healthcare employers now offer some form of investment advice to retirement plan participants as a result of the PPA.
The survey, conducted among plan sponsors by the American Hospital Association (AHA) and Diversified Investment Advisors, Inc. also found that sponsors have either implemented or plan to implement many other changes to their retirement plans in response to the PPA. For example, 59 percent now offer managed accounts and 67 percent plan to offer automatic enrollment.
"The Pension Protection Act provides employers with incentives for offering an automatic enrollment feature," said David Ray, vice president and not-for-profit practice leader at Diversified. "This is because these and other automated features have quickly been shown to benefit participants who want to save for retirement but need help getting started, or simply do not have the time to actively manage their accounts."
AHA and Diversified note that the survey "underscores just how much the PPA paved the way for a broad array of changes to retirement plan design and administration." Other key findings of the survey include the following:
- Healthcare employers are committed to education and communication to assist employees who may wish to take a more active role or seek out different kinds of investment guidance. To this end, 80 percent of healthcare plan sponsors are providing education by conducting employee meetings.
- Seventy-eight percent of healthcare sponsors offer a 403(b) plan, 47 percent offer a 457(b) plan, and 39 percent offer a 401(k) plan.
- Forty percent of healthcare plan sponsors have an onsite retirement plan representative for their employees, who can have a measurable impact on participation levels, and influence employee understanding of the plan.
"The healthcare retirement plan industry is a dynamic market that continues to be influenced not only by new legislation and regulations, but also by a more rigorous environment in which sponsors must compete for talent. Many factors contribute to the quality and sustainability of all-critical human resources," Ray said. "But retirement plans continue to be a focus of management and employees alike as part of those business imperatives."