This is an extraordinary finding by WTW. It says a lot about the inability of those paying into so called pensions and the “value for money” calculation!
WTW’s work tells me that the great experiment in providing people with wealth is failing in America as it’s failing in the UK.
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.
If we define “value for money” in the terms that matter to large employers (whether American of anywhere else for that matter), then the rate of accumulation is not the only thing that matters.
The American retirement system (the 401K savings plan) has been an experiment which left those retiring with a retirement wage that they could live on. But now these plans are maturing, employers have no idea if they’ve got value for their money. We know that there is an alternative to 401K which pays a pension without the strain of guaranteeing them. Shall we tell them?
