Employers want more from retirement plans built for a different era
Most US employers that run defined contribution (DC) plans cannot say with precision whether those plans are getting workers to retirement on time and with confidence.
A survey of 547 US plan sponsors by advisory firm WTW, the WTW 2026 Defined Contribution Survey, found that 60 percent of sponsors hold a working definition of retirement readiness.
Among those that do, the definition splits fairly evenly across income replacement (40 percent), retiring on time (39 percent) and retirement confidence (39 percent), with sponsors able to select more than one measure.
WTW labels the shortfall between what employers expect and what their plans deliver a "retirement outcomes gap."
Employers are asking more of these plans than before.
Improving the employee experience (69 percent) and improving retirement outcomes (63 percent) rank as their top objectives for the next two years, the survey found, and three in four sponsors place retirement savings among the core or top priorities in their total rewards package.
Yet many plans remain measured and governed for an earlier era, WTW said, leaving distance between employer ambition and plan design.
"The retirement outcomes gap is a call to action," said Chris West, WTW's senior managing director and defined contribution strategy leader.
Employers have poured money into retirement programs, West added, and the task now is to prove those programs are moving workers closer to a timely retirement.
The survey pointed to where plans stall.
Sponsors tend to track plan-level figures such as participation rates but less often break results out by employee group, WTW reported, which can hide gaps in access and saving behaviour.
Half of sponsors said their plan design needs minor or moderate updating, and one in five want to hand off future administration and fiduciary duties so their teams can concentrate on strategy, as per the survey.
Support also tends to thin out at the point of retirement itself, when workers must decide how to turn savings into income.
To address that, three in 10 sponsors plan to add an in-plan retirement income option.
Dave Amendola, WTW's managing director and intellectual capital and innovation leader for defined contribution strategy, said headlines push a "specific amount" workers should save.
But the figures mean little "until they are translated into a monthly lifestyle," he said, and employers must help workers turn balances into income.
On artificial intelligence (AI), sponsors showed more appetite for lower-stakes uses.
Nearly four in five (79 percent) said they would use AI for plan analytics, 73 percent to automate routine processes and 72 percent to personalize employee communications.
That willingness dropped for higher-stakes work: 37 percent for compliance and risk management, 33 percent for recordkeeper oversight and 29 percent for fiduciary governance.
Data privacy and security drew the most reservations, at 74 percent.
The findings land in a US market where the DC plan is the main retirement vehicle for most private-sector workers.
As of March 2025, 70 percent of US private-industry workers had access to a DC plan, compared with 14 percent for defined benefit (DB) plans, the US Bureau of Labor Statistics reported in September 2025.
Contribution ceilings keep climbing: the US Internal Revenue Service set the 2026 elective deferral limit for 401(k) plans at US$24,500, up from US$23,500 in 2025.
WTW set out four steps for narrowing the gap: define retirement readiness in measurable terms, use richer plan data and AI-enabled analytics to find where support is lacking, redirect time from administration toward outcomes, and extend more tailored support through the move into retirement.
