Defined Contribution Survey Highlights Recordkeeper & Plan Sponsor Issues in Light of Pandemic

Survey of 21 SPARK Institute Members Provides Insights into Issues Around 401(k) Plan Administration, Workforce Management and CARES Act Implementation.

The SPARK Institute and the Defined Contribution Institutional Investment Association (DCIIA) Retirement Research Center announced today the results of a survey of SPARK members on how they are responding to the coronavirus pandemic. SPARK members (including recordkeepers and other industry investment / service providers) were recently asked to respond to twenty-seven questions related to the crisis and implementation of the CARES Act. Twenty-one firms responded. The topline results showed the following:

Recordkeeper insights: Recordkeepers are adjusting their processes to accommodate coronavirus-related distributions (CRDs). These recordkeepers are tracking CRDs and two-thirds are accepting self-attestations from participants that they meet the eligibility requirement. Over 80% of those surveyed have already updated their systems and procedures to accommodate the CARES Act. Another 9% should be updated within a week. The volume of distribution requests and questions is up significantly. Still, more than two-thirds of the industry is meeting their Service Level Agreements (SLAs) to clients.

None of the surveyed companies has plans to lay off or reduce staff, but many have imposed hiring freezes on certain business units. To address shelter-in-place rules and social distancing guidelines, 98% of the industry is now working from home. This is up from 20% in January. The transition to working from home caused minimal disruption since the industry has had work from home procedures in place for more than a decade. To address the increase in employees working from home, recordkeepers have responded with an increased focus on cybersecurity, supplying employees with necessary technology, and online team calls.

Plan sponsor and participant insights: Those surveyed indicated that according to their data, approximately half of plan sponsors are considering reducing employer contributions until the crisis is over. To help avoid this record keepers and plan sponsors are also having discussions about alternative tactics to help address plan expense and cash flow concerns. For example, forfeiture accounts and ERISA budget accounts can be leveraged by plan sponsors to help pay some plan expenses. Additionally, many plan sponsors previously considering an RFP process have decided to put that process on hold. With so many of their employees now working from home, some plan sponsors are concerned with managing paperwork and required document signatures, payroll and staffing issues, and a lack of necessary technology infrastructure. Unlike in the 2009 financial crisis, most participants are not shifting their investments, but instead are looking for loans or hardship withdrawals. For those participants that are moving assets the shift is toward fixed income products.

“Our industry recognizes the need many Americans have for access to their savings as they face these challenging time, so our industry is working diligently to provide that access to workers,” said Tim Rouse, Executive Director of the SPARK Institute. “When this crisis passes and Americans can turn their attention to saving for their retirement, these same firms will be there to once again support these workers,” he added.

“Many of us are experiencing echoes of the 2008-2009 crisis, although this time is markedly different both in the origins of the crisis and the rapidity of the economic fallout,” said Lew Minsky, President and CEO of DCIIA. “We hope that both plan sponsors and participants will strive to maintain a long-term view in their retirement planning. DCIIA remains committed to working with plan sponsors and the broader retirement savings industry in highlighting ways to close the retirement savings and security gap, an issue that is being highlighted now more than ever as the pandemic reveals systemic gaps in emergency savings and other financial wellbeing issues.”

About the SPARK Institute
The SPARK Institute represents the interests of a broad-based cross section of retirement plan service providers and investment managers, including members that are banks, mutual fund companies, insurance companies, third-party administrators, trade clearing firms, and benefits consultants. Through the combined expertise of its member companies, the Institute provides research, education, testimony, and comments on pending legislative and regulatory issues to members of Congress and relevant government agency officials. Collectively, its members serve approximately 100 million participants in 401(k) and other defined contribution plans. For more information, visit:

Founded in 2010, the Defined Contribution Institutional Investment Association (DCIIA) is a non-profit association dedicated to enhancing the retirement security of America’s workers. To do this, DCIIA fosters a dialogue among the leaders of the defined contribution community who are passionate about improving defined contribution outcomes. DCIIA’s diverse group of members include investment managers, consultants and advisors, law firms, record keepers, insurance companies, plan sponsors and other thought leaders who are collectively committed to the best interests of plan participants. For more information, visit:

Media contacts:
Karen Witham, DCIIA, or 202-367-1124
Tim Rouse, SPARK Institute, or 508-838-1919

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