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Healthcare Sector Focused on Retirement Plan Design to Attract, Retain Workforce, According to American Hospital Association/Diversified Investment Advisors SurveyPosted by solo 401k on: 2006-12-08 10:14:04 in category:
Retirement Planning News [ Print | Permalink / 0 Comment(s) ] PURCHASE, N.Y.--(BUSINESS WIRE)--U.S. healthcare organizations are increasingly relying on the design of their retirement plans to serve double duty: to make saving and investing for retirement as simple as possible while making education and a breadth of fund offerings accessible to its workforce – all with an eye toward growing and retaining a qualified workforce in competitive times. According to the fourth annual survey, Retirement Plan Trends in Today’s Healthcare Market – 2006, conducted by the American Hospital Association (AHA) and Diversified Investment Advisors, Inc. (Diversified), healthcare employers, much like their counterparts in the corporate sector, have embraced automated retirement planning programs. In fact, 24% of healthcare plan sponsors automatically enroll employees in defined contribution plans upon eligibility, and 9% offer automatic deferral rate increases. In addition, a surprising 32% of healthcare employers offer a relatively new type of investment option – managed accounts, which offer investment advice and portfolio oversight from a professional investment management firm. “We expect these numbers to increase given the recent passage of the Pension Protection Act of 2006, which both clarifies the rules and offers incentives to employers to implement automatic features within their employee retirement plans,” said David Ray, the not-for-profit practice leader at Diversified. “The primary objective of these features and others such as lifecycle funds and automatic investment options is to help healthcare employees reach their financial goals for retirement.” The 2006 AHA/Diversified study also showed that healthcare employers are offering a greater number of investment options to provide increased investment flexibility to their employees. This year, 37% of plan sponsors said they offer more than 20 funds compared with 26% one year ago, and 30% two years ago. More than one-half of the plan sponsors surveyed said they would like to add asset allocation, equity growth, balanced and stable value funds within the next plan year. “Many plan sponsors are augmenting their fund array with additional funds from various families,” explained Ray. “As a result, we see a connection between the increase in the number of investment options and increased investment flexibility.” Even with an increase in the number of investment options, employers maintain that simplifying the investment decision process is very important, the AHA/Diversified survey showed. “Managed accounts and other services that automatically rebalance a participant’s investment allocation appropriate to his or her age and reflect a more conservative investment strategy as the employee approaches retirement are part of a growing movement to simplify retirement plan investing as much as possible,” said Laura White, vice president of marketing at Diversified. “But, while an automated solution can help jumpstart retirement plan savings and investing, education continues to play an important role in ensuring that participant saving and investing is on track to meet retirement goals.” In fact, according to Retirement Plan Trends in Today’s Healthcare Market – 2006, education continues to be a top challenge for 83% of respondents, along with encouraging employees to take appropriate action (71%). In addition, 63% of plan sponsors surveyed plan to improve education within the next year. As in the 2005 AHA/Diversified study, the 2006 study revealed that healthcare sponsors are increasingly outsourcing administrative functions to their providers. For example, sponsors with at least 1,000 employees said that they outsourced hardship withdrawals (58% in 2006 vs. 56% in 2005), processing loans (62% in 2006 vs. 58% in 2005), and paperless enrollments (42% in 2006 vs. 39% in 2005). According to Amy Goble, vice president of account management, AHA Solutions, Inc., “Healthcare plan sponsors are focused more on the day-to-day challenges of running a hospital. By outsourcing retirement plan administration, human resources departments can focus more on strategic HR issues such as hiring, retention and training.” Goble also noted that the desire to outsource plan administration is expected to grow further with 17% of Survey respondents wanting to outsource paperless enrollments and another 8% wishing to outsource the administration of both loans and hardship withdrawals, in the future. But much like last year, there were also those who cited reasons for not outsourcing plan administration, including 44% of respondents who said they want to maintain control in-house and 59% of employers who feel they have adequate HR staff to handle day-to-day plan management. Other key survey findings included: * Eighty-three percent of healthcare plan sponsors use email to communicate with their employees despite the fact that many healthcare employees do not have traditional “desk jobs.” * The offering of hybrid plans such as cash balance plans grew 11% over last year’s survey data. The shift in the hybrid plans is primarily away from traditional defined benefit plans and toward cash balance plans. * While services and age requirements for plan entry seem nominal, many plan sponsors protect themselves from turnover with an additional requirement for receiving the employer contributions to the plan. Forty-six percent of plan sponsors impose a minimum age of 21 to be eligible to receive the employer contribution, while 60% require participants to have a minimum one-year tenure to receive the employer contribution. “The retirement plan market continues to evolve, posing both challenges as well as opportunities for healthcare plan sponsors and providers alike. Together, they can meet the business demands of recruiting and retaining valuable employees, lowering plan expenses and helping to ensure that employees save and invest enough for their retirement,” Ray added. Retirement Plan Trends in Today’s Healthcare Market – 2006 focuses on healthcare organizations’ defined contribution retirement plans with the largest number of participants other than their 401(a) plan. The sample represents hospitals that had one or more active defined contribution plans during the 2005 year. A total of 339 hospital administrators responded to the survey, which is based on 2005 data. To request a copy of the survey report, please visit www.aha-solutions.org or call 800-242-4677. About AHA The American Hospital Association (AHA) is a not-for-profit association of healthcare provider organizations and individuals that are committed to the health improvement of their communities. The AHA is a national advocate for its members, which includes nearly 5,000 hospitals, healthcare systems, networks, and other providers of care. Founded in 1898, the AHA provides education for healthcare leaders and is a source of information on healthcare issues and trends. For more information, visit the AHA Web site at www.aha.org. About AHA Solutions, Inc. AHA Solutions, Inc., a wholly-owned subsidiary of the American Hospital Association, functions as a product advocate for hospitals; working with vendors to create platforms of validated and differentiated product and service solutions to address key operational needs. AHA Solutions is a trusted market resource on key issues in health care and related available resources. For more information, contact AHA Solutions at (800) 242-4677 or visit www.aha-solutions.org. About Diversified Investment Advisors, Inc. Diversified Investment Advisors, Inc. is a national investment advisory firm specializing in retirement plans. The company’s expertise covers the entire spectrum of defined benefit and defined contribution plans, including: 401(k) and 403(b) (Traditional and Roth); 457; non-qualified deferred compensation; profit sharing; money purchase; cash balance and Taft-Hartley plans; and rollover and Roth IRA. Diversified helps more than 1.4 million participants save and invest wisely to and through retirement. Headquartered in Purchase, NY, the company’s regional offices are located in Arkansas, California, Illinois, Iowa, Louisiana, Maryland, Massachusetts, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas and Wisconsin. To learn more, visit www.divinvest.com. |
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