The short answer: A new Voya Investment Management study found that a higher number of employed target-date fund (TDF) investors feel more confident making good investment decisions, compared to participants who invest in other options. For HR and benefits leaders, that confidence gap translates directly into participation, retention and reduced plan-related friction.
The headline numbers
The study compared employed TDF investors against employed non-TDF investors across three confidence measures:
- 95% of TDF investors feel more confident making investment decisions, versus 75% of non-TDF investors
- 71% of TDF investors feel confident they’ll reach their retirement goals, versus 58% of non-TDF investors
- More than 90% of TDF investors say their TDF helps reduce the stress of retirement planning, versus 73% of non-TDF investors
When asked why they chose a TDF, participants named four reasons: professional management, ease of use, built-in diversification and ongoing rebalancing.
What does this mean for HR and benefits leaders?
A confident participant is a more engaged participant. When employees feel good about their retirement plan, the downstream effects show up where HR feels them: fewer one-off questions, smoother open enrollment, stronger retention conversations with key talent and a benefit that supports your total rewards story instead of generating complaints.
How do TDFs reduce HR workload?
Plans without a strong default investment option tend to surface more questions during enrollment, more requests for one-on-one guidance and more confusion at lifecycle moments like job changes or near-retirement transitions. A well-selected Qualified Default Investment Alternative (QDIA) built around target-date funds takes the most-asked questions off your plate and replaces them with a clear, defensible answer: This is the default, here’s why it’s appropriate and it adjusts automatically as the participant ages.
What should plan sponsors check now?
Three things:
- QDIA selection documentation. Is your TDF selection process documented in your fiduciary file? Board-ready reporting on QDIA selection is a basic governance expectation.
- TDF benchmarking. TDFs vary widely in fees, glide paths and underlying construction. Benchmarking against similar plans helps confirm the suite still fits your participant demographics.
- Re-enrollment opportunity. If your plan has legacy participants in non-TDF options who would benefit from the default, a re-enrollment event is a clean way to lift participation without adding employer cost.
The takeaway
Higher participant confidence supports higher participation, better retention and a stronger benefits story. If you haven’t reviewed your QDIA selection or run a TDF benchmarking exercise in the last twelve months, that’s a quick win on plan health.
To talk through TDF selection, benchmarking or a re-enrollment strategy for your plan, contact us.