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Looking Ahead to 2025: 5 Trends Shaping the Future of 401(k) Plans
Last Updated: December 30, 2024
As 2024 closes and we head into 2025, we’re looking at the trends that will define the coming year. In 2025, the focus shifts to improving retirement readiness through goal-based 401(k) plan oversight and management.
Here are the trends PCI will be watching in 2025:
A Problem to Solve
Despite all of the media coverage on tertiary matters, the core issue persists. Broadly speaking, employees aren’t on track for retirement.
Curious about how to tackle this head-on? Check out our upcoming “What’s Your Problem, 401(k)?” webinar, where we dive into the real issues holding 401(k) plans back—and what you can do to help solve them.
WEBINAR
What’s Your Problem, 401(k)?
Join as we break down the state of retirement readiness in America, its impact on financial security, and why current 401(k) plan management is to blame.
Redefining Success
Participation rates, employee engagement, and lengthy investment reports have been just a few traditional measures to define 401(k) plan success. But, if we want to change the outcome, we are going to have to change how we track performance.
Back to Basics: The 3 Key Drivers
Sometimes, less is more. In 2025, we expect more committees to focus on the fundamentals of retirement readiness. The three key drivers —contribution levels, investment performance, and fees—are still the most powerful levers fiduciaries have.
● Are employees saving enough?
● Are investment returns maximized?
● Are plan fees minimized?
These three drivers have always been the backbone of retirement readiness.
Assign Responsibility for the Goal
For meaningful improvement in retirement readiness, someone has to take responsibility. In 2025, we believe this will begin to change.
The Policy Landscape Is Shaping Retirement Planning
The state of American policy is prompting a reexamination of long-held institutions, including the 401(k) system. Some voices are even questioning whether 401(k)s should exist at all, arguing that they aren’t working for the American people. While these critiques highlight real challenges, we believe the solution isn’t abandoning the system—it’s changing the way we manage it.
401(k)s can work, and they should work. But achieving that requires a commitment to managing plans in a way that drives outcomes, prioritizing employee savings, strong investment performance, and fee accountability.
Recent legislative developments, like SECURE Act 2.0, create opportunities for employers. Expanded features, such as auto-enrollment and auto-escalation, help get more employees saving. Pension-Linked Emergency Savings Accounts (PLESAs) offer a short-term financial safety net while encouraging retirement contributions. These advancements show that with the right approach, the 401(k) system can evolve to meet the needs of today’s workforce. For fiduciary committees, understanding and leveraging these changes can turn challenges into opportunities to drive better outcomes for employees.
2025 is shaping up to be a year of action for 401(k) plans. By staying focused on the outcomes that matter, fiduciary committees can help employees retire with confidence—and change the trajectory of retirement readiness for the better.
To stay up to date on these trends, follow us on Youtube, Twitter and LinkedIn. If you’d like to address your participants’ retirement readiness, let’s get acquainted.
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