News You Can Use: PSCA releases first-ever 403(b) target-date survey

I have to admit, at EBN we’re pretty focused on 401(k)s when it comes to retirement planning. Let’s face it – it’s the bigger, flashier retirement plan sibling to 403(b) plans. However, I often have to remind myself that there are thousands upon thousands of nonprofit organizations and school systems that use 403(b)s as their retirement savings option for employees.

This week, I have the Profit Sharing/401k Council of America for giving me a kick in the pants regarding 403(b) plans. PSCA just released a new survey on how 403(b) plans are embracing target-date funds. The group finds 51% of respondents offer target-date funds as investment options in their 403(b) plans and the number of 403(b) plans using target-date funds as the default investment option more than doubled since 2007.

PSCA President David Wray hints that perhaps the growth could be a bit of plan envy? “This survey shows that 403(b) plans are evolving to more closely resemble 401(k) plans.”

Whatever the reasons for opening their arms to target-date funds, PSCA finds 403(b) sponsors largely are happy with them. More than 58% report being either satisfied or very satisfied with their target-date funds. Must-have features include:
* Diverse asset allocation.
* Quality of underlying investment managers.
* Liability risk minimization.
* Cost control.