What 4,100 government retirement plans need–now

New research reveals demand for better technology, new plan designs, more targeted service from service providers–and a commitment to positive change.

The challenges

Until now, most research focused on a modest number of government retirement plans. Lincoln studied 4,100 of them and uncovered a mountain of challenges in a shifting landscape.

Goals are not being met

Government plan sponsors aren’t accomplishing their broadest plan goals.



What are their goals?

Why sponsors offer a defined contribution plan
They want to...
Help employees save for retirement
Attract and retain workers
Promote employee satisfaction

Takeaway

Practical goals prevail. Financial outcomes are a higher priority to sponsors than employee satisfaction and retention.

How effective are sponsors?

Slightly more than half feel they're succeeding.
Help employees save for retirement
Attract and retain workers
Promote employee satisfaction

Takeaway

Only half of plan sponsors feel successful at the goal they identified as most important.

Out of alignment

Consultants and service providers are not focusing on the goals sponsors care about most.



What sponsors need

What sponsors need to meet their goals
Communication to employees
Plan design
Investments and administration

Takeaway

Soft skills are in demand. Employee communication is critical.

How service providers spend time

The mismatch: Focusing on other things
Communication to employees
Plan design
Investments and administration

Takeaway

Service providers need to refocus, spending less time on investments and more on communication and administration.

Opportunities for improvement

Across all categories, governmental plan sponsors 
see areas that can be improved.



Counties

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Special tax authorities

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Towns

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Federal/state

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Cities

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Higher-ed/Public hospitals

Where dissatisfaction is highest

0

Low rates of participation

0

Low deferral rates

0

Participant communication & education

0

Technology/ plan reporting

0

Plan sponsor service & communication

0

Responsive service

Takeaway

Across the board, sponsors are most unhappy with service and communication they get from service providers. Low participation and deferral rates are close behind.

Plan sponsor needs

With pensions under pressure and participants struggling to save for retirement, government plan sponsors are looking for new solutions. To get there, they need personalized, results-oriented service from service providers committed to the long term.

Need: New & fewer service providers

For service providers, there’s no room for complacency. More than 68%
of sponsors are likely to meet with a potential replacement within the
year. And most plans with multiple service providers want to consolidate.



Who uses multiple providers

Most plans use multiple providers
Counties
Special tax authorities
Towns
Federal/state
Cities
Higher-ed/public hospitals

Takeaway

The majority of sponsors use multiple providers, especially cities, higher-ed and hospitals.

Who wants to consolidate

Most would prefer just one
Counties
Special tax authorities
Towns
Federal/state
Cities
Higher-ed/public hospitals

Takeaway

Sponsors in all areas see the advantages of using just one provider.

Need: Solutions for common concerns

Not surprisingly, sponsors want greater participation and higher deferral
rates. They also need service providers who will work hard to understand
their goals and have deep experience in government retirement plans.



Counties

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

Special tax authorities

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

Towns

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

Federal/state

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

Cities

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

Higher-ed/Public hospitals

Participation and deferral rates need help
Participation rates
Deferral rates

Takeaway

Across all entities, participation and deferral rates for government sponsored plans are considerably lower than those for 401(k) and 403(b)s.

1 59th Annual Survey of Profit Sharing and 401(k) Plans, Plan Sponsor Council of America, 2016.

Need: Address personal priorities

Employee communication, especially one-on-one guidance, is critical for sponsors.



Effectiveness of 1x1 guidance

An overwhelming majority believe one-on-one guidance is effective
94%
Counties
90%
Special tax authorities
90%
Towns
92%
Fedaral/state
92%
Cities
95%
Higher-ed/Public hospitals

Takeaway

Plan sponsors believe in the power 
 of personal communication.

Offering 1x1 guidance

Despite their interest, most plans don’t offer one-on-one guidance
28%
Counties
38%
Special tax authorities
20%
Towns
48%
Federal/state
26%
Cities
55%
Higher-ed/Public hospitals

Takeaway

There is an enormous gap between what sponsors know is effective versus what they’re offering.

Plan sponsors speak up

“Give me data”

They need data-driven plans using analytics and comparative data to track changes.

“Give me technology”

Omnichannel options, default investment options and automatic increases are critical today.

“Collaborate, please”

Sponsors want better service–
from consultants and plan providers who can work together.

The Lincoln perspective

This data presents many challenges. But we also see opportunities, and a call to new action. Lincoln is committed to driving positive outcomes for every one of the 1.4 million plan participants we serve, and the organizations that employ them. To get there, we blend highly personal, one‐on‐one service with a dedication to continually evolving technology. We want our customers to know that we’re always working to understand their needs, and adapting to meet them.

Download the study and whitepaper

We invite you to explore, share insights with your staff, and find the solutions you need.

Thank you

We hope this study informs and inspires you. If we can answer
questions or offer solutions, please reach out.

About the study

Researchers used phone and online surveys to contact 4,100 governmental defined contribution plan sponsors. Respondents represent federal, state and local levels of government with plan assets ranging from under $100 million to over $2 billion. This research was conducted from April to August of 2016 by the Lincoln Financial Group Research and Insights Office and Qualtrics, a U.S.-based, global research firm.



Government entities

Plan assets

Respondents’ roles

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