Healthcare Industry Retirement Plans Adjust to Changes; Older Employees Take to Web

Recent legislation and a flurry of merger & acquisition (M&A) activity have led to dynamic changes in the healthcare industry. The Affordable Care Act (ACA) is resulting in many healthcare employers reexamining their organizational structures and operations. The related pharmaceutical industry similarly has seen significant M&A momentum. Fidelity has released a report, Defining Excellence: Plan Design and Retirement Readiness in the Not-For-Profit Healthcare Industry, that focuses on the challenges faced by these plan sponsors. Data was gathered from 600+ plans serviced by Fidelity, representing about 2 million participants and $72 billion in plan assets. One particularly interesting trend reported by Fidelity is that as employee tenure increases, the gap in participation levels tends to narrow between those in plans with automatic enrollment (AE) and those in plans without AE. While this result is somewhat to be expected as few tend to opt out of participating in their employer's plan, what is notable is that the gap never fully closes, even for employees with 25+ years with their employer. In AE plans, the participation rate hovers within four percentage points on either side of 80%, regardless of tenure. By contrast, in non-AE plans, the participation rate for employees with one to three years of tenure is only 35%. This does improve to 70% for those with 25+ years, but still falls short of the 84% for those in AE plans with a similar tenure.

Surfing Boomers. Another interesting finding in the Fidelity study is that across all age groups except those 70+, participants preferred engaging with their plan through Fidelity's participant website than via phone. The level is very consistent for those in their 30's through those in their 60's, with a slight uptick as one approaches age 65. WIth the continued growth of the smartphone and tablet markets, it would appear that access through a portal will remain strong for the foreseeable future.