State of the participant 2020

Our annual look at participant behavior and retirement readiness across the defined contribution plans on our open-architecture platform¹ can help you make sense of what’s happening with your own participants—and suggest actions you can take to help them.

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Plan participants under age 40 are on track for a secure retirement (retirement ready)

60.4%

of participants under age 30 are retirement ready.

65.9%

of participants ages 30 to 39 are on track—the highest of all age groups.

 

53.3%

of those between ages 40 and 49 have also hit the mark.

 

Auto features continue to drive retirement readiness

47.9%

average retirement readiness for plans without auto features.

60.2%

average retirement readiness for plans with automatic enrollment + a default contribution rate of 6%.

63.0%

average retirement readiness for plans with automatic enrollment + a default contribution rate of 6% + auto-contribution increases of 1% yearly.

 

Status update

As the COVID-19 pandemic took hold this spring, over 9 out of 10 active participants rolled with the changes²

 

Read our latest update on participant behavior

Maintained or increased their deferral percentage

Avoided a coronavirus-related distribution or other type of withdrawal

Resisted borrowing from their 401(k)

Stayed with their investment mix

Status update

Among participants making strategic investment changes in April 2020, some sought opportunity, while others sought stability³

#1 shift in investment strategy

From stable value/fixed-income funds to diversified funds4

#2 shift in investment strategy

From diversified funds to stable value/fixed-income funds

#3 shift in investment strategy

From diversified funds4 to equity funds

Opt-out rates for auto-enroll plans seem to greenlight higher default contributions

At a 3% default contribution rate:

 

12.0% of eligible employees opt out of enrollment

At a 6% default contribution rate:

 

10.4% opt out

At an 8% default contribution rate:

 

7.9% opt out

Effective plans are built from the insight out

John Hancock’s consultative, data-driven approach has been refined during our 50 years of experience working with plans of all sizes and complexities. Our goal is to make sure all the pieces work together—and we offer all the support necessary to make retirement plans work for plan participants, sponsors, and financial professionals.

Important disclosures

 1 Original data is from our open-architecture platform, which included 1.2 million participants, 1,123 plans, and $77.48 billion in assets under management as of 9/30/19. 2 “Status update” data is from our open-architecture platform from the period of 3/1/20 through 3/31/20. 3 All data mentioned above is John Hancock’s internal data as of 4/30/20. Fund categories were defined as target-date fund, stable value/income, growth and income, equity, asset allocation, and other. A participant in ≥2 fund categories was labeled as diversified. A participant who changed from ≥2 fund categories to ≥2 other categories or asset allocation alone was labeled as having made changes to a diversified portfolio. “Diversified funds” means a mix of funds from different categories, an asset allocation fund, or a portfolio offering.

The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. John Hancock does not provide investment, tax, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.

 

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