Experts Predict Major Growth in Retirement Coverage, Benefits

Experts predict massive growth in defined contribution plan coverage, particularly for small plans, in the next several years. By the end of 2026, 88% of employers with fewer than 100 employees are expected to offer a defined contribution plan, up from 46%, according to new industry research. 

Transamerica Corp.’s Prescience Report is intended to help advisers and executives build financial benefits programs for their employees. In a year-long survey conducted in 2022 and 2023, the Prescience 2026 polls consulted 36 experts about the future of financial well-being offerings until December 31, 2026.

In 2022, Transamerica reported that 46% of employers with fewer than 100 employees provided an employee-funded retirement plan. Experts say by year-end 2026, small businesses will be able to match the 100+-employee market, with 88% of both segments offering a defined contribution plan.  

The increase in coverage will be propelled by state mandates, the report stated. As of June 2022, 16 states and two cities required some employers to provide retirement plan coverage, with many mandating employers with as few as five employees offer coverage.

At the end of 2026, a suite of traditional and emerging benefits will be available, according to the research. Seven in 10 employers are predicted to offer health savings accounts, a triple-tax-advantage fund for healthcare expenses in retirement. Four in 10 employers may tackle uncovered health expenses by providing gap insurance.  

The Prescience panelists foresee some employers deciding to extend coverage to retirees and executives. The report’s experts predicted 13% of employers will provide medical coverage to retirees and 17% will deliver executive health care coverage.

The expansion of financial well-being benefits can include student loan repayments, emergency savings funds, credit improvement programs, mortgage assistance and rent assistance. By 2026, 40% to 60% of employers are expected to put forward some of these offerings.

Industry specialists responding to Transamerica’s questions think the current labor shortage will continue through year-end 2026, driving increased demand for retirement and well-being benefits.

With significant competition for talent, employers will need to offer increasingly generous benefits to attract top talent. The Transamerica report predicted that employers unable to provide these benefits will have difficulty sustaining a dynamic workforce.  

The industry specialists polled for the report represent trade groups, research organizations, consulting firms, academic institutions, advisory firms, investment management firms, service providers and trade media.