Healthcare organizations are revising their retirement plans to retain and attract staff and are increasingly updating them to become more like those found in the private sector, according to Transamerica.
In its survey, Transamerica found that many healthcare organizations are moving away from 403(b) plans, which are tax-sheltered annuity plans found in certain tax-exempt organizations, to 401(k) plans. The number of healthcare organizations that used 403(b) plans decreased from 88 percent in 2015 to 72 percent in 2016. Organizations that sponsor 401(k) plans rose from 38 percent to 49 percent in the same timeframe.
Fewer healthcare organizations are sponsoring defined benefit plans. Currently, 27 percent of organizations have a defined benefit plan and 38 percent of them have frozen their plan.
"Many healthcare organizations have little choice but to freeze their existing defined benefit plans and seek ways to terminate frozen plans," Brodie Wood, senior vice president at Transamerica, told PLANSPONSOR.
Among healthcare organizations with a defined contribution plan, 70 percent of non-highly compensated employees participate in them compared to 95 percent of highly compensated employees who participate. Many healthcare organizations are trying out stretch matches to boost participation in these plans, and 55 percent now automatically enroll participants.
Transamerica surveyed 87 hospital administrators and CFOs, which represent healthcare organizations with at least one active defined contribution plan, to reach these findings.