When Plan Participants Know Their Plan Offers ESG Options, 90% Invest in Them
According to the Schroders 2021 US Retirement Survey, 37% of defined contribution plan (DC) participants said they are offered ESG-related investment options by their employer, while 40% said they did not know.
Of those who were aware of their ESG options, 9 out of 10 said they invest in them.
Further, of those who said their DC plan did not offer ESG investment options or did not know, 69% said they would or might increase their overall contribution rate if offered ESG options. Only 31% said they would not.
“Offering plan participants ESG investment options would not only appeal to purpose-minded investors, but it could also help to motivate some participants to save more toward their retirement,” said Deb Boyden, Head of US Defined Contribution at Schroders. “Surprisingly, four-in-ten participants didn’t know if their plan offered any ESG options, which indicates the need for greater plan communications because once investors know they have the option, they seem eager to invest.”
“Despite regulatory overhang, demand for sustainable investment retirement options continues to rise,” said Sarah Bratton Hughes, Head of Sustainability, North America at Schroders. “Looking ahead, taking ESG adoption from ambition to action will require a greater emphasis on education by plan sponsors, so participants understand the purpose of ESG and how sustainable investments can be used to build retirement savings.”
Impact of COVID-19 on DC Participants
During the COVID-19 crisis in 2020, 33% of plan participants said they increased their contribution rate, while 10% said they decreased it; 57% left their contribution rate unchanged.
Almost three-in-four (74%) plan participants said the COVID-19 crisis will have no impact on when they plan to retire; while 17% said they plan to retire earlier and 9% said they plan to retire later.
Other Survey Findings Among DC Plan Participants
About the Survey
The Schroders U.S. Retirement survey was conducted by 8 Acre Perspective nationwide among 1,000 U.S. consumers ages 45 –75 from January 20— 27, 2021. Respondents were fairly evenly split by age and gender; age: 45-59 (367), 60-69 (348), and 70+ (285); male (501), female (499). The survey included 230 working respondents with employer-provided defined contribution retirement plans.
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