Retirement Plan Participants Want Their Investments to Make a Difference
Plan sponsors might consider building an investment lineup to meet the growing demand for sustainable options from defined contribution retirement plan participants.
Nearly three-quarters (74%) of retirement plan participants said they would increase their contribution rate if offered sustainable investments, compared to 69% in 2021, according to the Schroders 2022 U.S. Retirement Survey. They said they want their investments to be aligned with their values (87%), and that they see environmental, social and governance investments as a driver of performance (78%).
Deb Boyden, head of U.S. Defined Contribution at Schroders, says the survey supports plan sponsors adding ESG investments to their plans to boost participant contributions and bolster retirement readiness. Plan sponsors should study sustainable investments to include these as options in the plan investment menu, she adds.
“In terms of building a plan’s investment lineup to meet the growing ESG demand, the first step for plan sponsors is to gain a deeper understanding of ESG, its various concepts and approaches,” Boyden says. “Additionally, it is important to educate, and perhaps survey your participants, to discover what your plan participants’ level of awareness of or interest in ESG is.”
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