When defined contribution plan sponsors were asked to name the top three priorities over the next 12 months, expanding financial wellness, ensuring regulatory compliance, and reducing plan costs were among the top responses.

In fact, 4 in 10 (39%) respondents cited expanding their financial wellness programs as their No. 1 focus, underscoring the importance of ensuring good participant outcomes to plan sponsors. And while financial wellness was the most popular top priority overall, nearly as many respondents are focused on the regulatory compliance of their plan (37%) and cutting costs (36%), followed closely by adding retirement income solutions (35%).

As one might expect, however, the top priority varied by plan size. While expanding financial wellness was the top priority for plans with $101-$500 million in AUM, smaller plans ranked improving governance/fiduciary oversight as their top priority, and larger plans ranked ensuring regulatory compliance as No. 1.

These findings come via Mercer’s inaugural 2025 Defined Contribution Practices Survey, “Voice of the Plan Sponsor,” which highlights the latest trends, challenges, and strategies plan sponsors are using to strengthen their DC programs. The survey included 225 DC plan decision-makers from diverse employers, managing over $77 billion in assets. The firm had previously released an executive summary of the survey, but now the full report has been released.

Regarding financial wellness, 6 out of 10 DC plan sponsors said helping employees achieve their financial and retirement goals is their program’s primary objective. Mercer noted that the respondents largely found that their financial wellness programs were meeting or exceeding expectations as measured by engagement metrics, financial improvements, and retirement readiness. Almost all rely on their recordkeepers to provide financial wellness services and are generally satisfied with how well their programs are performing. And most respondents indicated that they plan to build on these programs in the coming year.

The survey also found that financial advice offerings are expanding, with two-thirds of respondents offering managed accounts and over half offering independent advice or other digital advice tools.

Cost Management

Cost management was also major theme, as evidenced by the large majority looking to take action to reduce plan costs in the coming year, but this appears to be driven more by a drive for efficiency than any push towards austerity, Mercer observed. Three quarters of respondents (75%) said they expect to see a slight or significant increase in their plan budget in the coming year, with larger plans expecting greater increases. Just 3% expect to see their budget decrease slightly and none foresees a significant drop, the report noted.

That said, the report also showed that 7 in 10 (70%) respondents said they are either taking, or planning to take, action to lower plan costs. Of these, more than half (54%) reported that they were changing plan design characteristics such as vesting or automatic features as a measure to reduce cost or would consider doing so. Additionally, more than a third (37%) are considering workforce reductions as a route to lower costs, which Mercer believes stems from broader organizational workforce alignment to business needs versus being driven by DC plan-related savings measures.

Not surprisingly, preferred cost-cutting measures differ by employer size, with smaller to mid-sized employers (less than 5,000 employees) more likely to consider changes to vesting or auto features.

Nearly 3 in 10 (29%) respondents said they are using or considering multiple employer plan (MEP) or pooled employer plan (PEP) structures as a route to reduce costs, but the report emphasized that MEPs and PEPs are not necessarily viewed solely as cost-cutting instruments.

When asked whether they were considering moving to a MEP or PEP structure more generally (e.g., not solely as a cost-cutting measure), more than a third (36%) said that they were and a further 31% said they may do so in future.

Plan sponsors also show rising interest in delegating plan management tasks, with a strong majority of respondents (83%) considering partial or full delegation of their plan management.

AI as a Gamechanger

Many DC plan decision-makers also see artificial intelligence (AI) as a potentially pivotal technology, with 44% saying it will have the biggest impact on the success of their plan over the next 3 to 5 years.

Moreover, two-thirds of respondents (67%) are actively exploring or implementing AI or advanced analytics into their plan strategy, while a further 26% are interested but not actively exploring. This aligns with current activity in the broader investment management sector, where existing AI technology is already deeply embedded, the report noted.

Mercer noted that this reflects similar beliefs found in its Large Asset Owner Barometer, which reported that 43% of the world’s largest investors believe that AI will be highly influential in shaping the macroeconomic environment over the next 5 to 10 years, while a further 38% believe it will be influential.

Among the use cases that will be plan focused include advanced analytics that enhance the investment process, plan design optimization that enables sponsors to refine plan features, investment options, and fee structures based on participant data and market trends.

Plan Governance

As fiduciary responsibilities grow more complex, plan sponsors increasingly rely on external advisors. To simplify complexity and manage risk, many plan sponsors say they are increasing their reliance on external advisors and consultants, with 80% retaining an external fiduciary advisor, the report noted.

Legal risk is a persistent concern for DC plans, with nearly 1 in 5 having faced litigation in the past five years. Mercer noted that, while fees remain a prominent driver of litigation, the scope is widening to include additional areas of fiduciary responsibility.

In addition, the survey found that the vast majority of plans use committees to oversee investments and administration, with over half relying on a single committee. Committees typically consist of three to eight members.

And while an overwhelming majority of plans reported being pleased with their recordkeeper’s services, respondents did highlight a range of areas where they believe recordkeepers can improve their offerings. In this case, almost half (47%) reported wishing for greater cost and fee transparency, 43% for an improved technology/portal experience, and 41% for better participant communication and education. Perhaps not surprisingly considering the importance being placed on financial wellness, nearly 4 in 10 (38%) said they wish for better financial wellness resources.

The survey was conducted by Dynata in July 2025 and yielded 225 responses. Respondents came from a range of employer sizes, with the largest proportion (39%) coming from employers with 501–1,001 employees. Employers with more than 5,000 employees accounted for 14% of responses.

 

 

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