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Survey: Retirement plan participation by nonprofit workers reaches new high


Despite COVID-19 hitting nonprofit organizations particularly hard last year, nonprofit workers participated in 403(b) retirement plans at the highest level since tracking began in 2008, according to an annual 403(b) Plan Survey from the Plan Sponsor Council of America.

Overall retirement plan participation continued to climb, rising to 77.2% in 2020, up from 76.6% in 2019 and 72% in 2018. The survey, sponsored by Principal Financial Group, surveyed nearly 400 nonprofit retirement plan sponsors on outcomes during 2020.

The increase in plan participation coincided with a continued emphasis by nonprofits on automatic enrollment in 403(b) plans. Nearly 30% of organizations said they use the feature, up from 15% five years ago.

“Nonprofit workers’ continued commitment to retirement plan participation, even in the face of economic uncertainty, affirms the importance of these programs, and the value of the education provided by employers,” said Hattie Greenan, director of research and communications at PSCA. “The use of automatic enrollment has been shown to not only increase participation, but participant outcomes.”

The survey also showed an overall increase in focus from nonprofit employers on retirement benefits and outcomes. That included:

  • Automatic enrollment features are used by 28.7% of plans (including 42.9% of large organizations), compared with 24.4% in 2019.
  • More than half (56.3%) of plans with automatic enrollment now also automatically escalate the default deferral percentage over time.
  • Half (49.5%) of 403(b) plans now offer Roth after-tax contributions, up from 46.8% in 2019.
  • The availability of investment advice for participants increased to 41.6% in 2020 from 36.7% the previous year.

“The survey results show resilience among organizations and workers that arguably faced the biggest challenges during the pandemic: hospitals, foundations, schools, and the arts,” said Kevin Morris, vice president and chief marketing officer for Retirement and Income Solutions at Principal. “As we move into the next phase of recovery, it’s as important as ever that nonprofits are supported in providing strong retirement benefits and education to their workforce to continue to help participants feel more financially secure.”

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