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Small Market Retirement Plan Coverage Predicted to Surge

Practice Management

Workplace benefit professionals who were surveyed on a wide range of employee benefits issues looking toward 2026 predict a massive increase in employer-provided defined contribution (DC) plan coverage, particularly in the smaller plans market.

Indeed, most respondents foresee 88% of employers offering a DC plan by year-end 2026. As most observers are probably aware, this level of coverage is already achieved in the 100+ employee market. But the level of coverage among small employers is much lower where just 46% of employers with 1 to 99 employees offered an employee-funded retirement plan, according to the 22nd annual Transamerica retirement survey published by the Transamerica Institute in 2022.

These findings are contained in Transamerica Prescience 2026, which is the first in a series of 10 polls and three discussion sessions being conducted over 12 months, each focusing on a particular aspect of employee benefits. Thirty-six experts from across the nation answered the survey’s 47 questions. Transamerica notes that it chose panelists based on their positions as thought leaders and experienced professionals in retirement plans, employee benefits, and financial well-being.

The “vision of the future” outlined in the first poll includes a growing demand for retirement and financial well-being benefits fueled by a continued talent shortage and government mandates for retirement plans.

The study participants opine that state mandates will be essential in increasing coverage. Transamerica notes that, as of the writing of this report, 15 states mandate retirement plan coverage by at least some employers, and only one (Oregon) mandates coverage by employers with as few as five employees. Also, the SECURE 2.0 Act was not passed at the time of the survey.

Financial Well-Being Benefits


Panelists also assessed what they believe will be the range of traditional and emerging financial well-being benefits at year-end 2026.
Among the predictions are that high deductible health plans will become more prevalent; consequently, nearly 7 in 10 employers will offer health savings accounts, and 4 in 10 will supply gap insurance for uncovered health care expenses. Employers looking to differentiate themselves may also choose to offer retiree medical coverage and executive health care coverage. They also project that between 13% and 17% of employers will offer these benefits by year-end 2026.

Other benefits that will experience growth over the next four years will include mortgage or rent aid, credit improvement programs, student loan repayments, and emergency savings funds. Transamerica notes that these benefits are projected to be offered by 40% to 60% of employers by the end of 2026.
Although not all employers are financially able to offer these benefits, the study suggests that these benefits will help set employers apart and improve their success in attracting talent. In contrast, employers unable to offer these benefits may struggle to keep employees and improve business performance.  

Flexible Benefits Packages


Some industry specialists further surmise that a progressive shift to flexible benefits will occur as employers look to attract more diverse population segments to the workforce. As a result, the scope of financial well-being will expand significantly, and they predict that coaching and employee assistance with benefits selection will be in great demand. Greater workforce inclusion will promote flexibility in benefits and prompt employees to be more involved in benefits elections than in recent years.

The study emphasizes that, as the country moves toward greater personalization of benefits, “responsible choice architecture” will be essential to protect employees from regression to inadequate retirement funding for the sake of freedom. 

Financial Well-Being Indexes Questioned


While most respondents agree on many future trends for workplace benefits, opinions diverge on the prospects for broad employer reliance on financial well-being indexes. Just over half (53%) “agree or strongly agree” that most employers will have an economic well-being rewards program in place by year-end 2026, but they have differing views on whether most employers will monitor the financial well-being of their workforce or rely on the well-being indexes provided by their employee benefits partners to check the economic well-being of their employees.

Panelists also opine that employees’ concern over the privacy of information needed to measure their financial wellness accurately will constrain use. Indeed, many employees may be reluctant to share information about their debt, personal wealth, other sources of income, and family members’ resources with their employer.

All in all, by year-end 2026, these industry professionals foresee:

  • Retirement plan coverage in the under-100 employee market will have equaled coverage in the 100+ employee market.
  • Flexible benefits and total rewards programs will have grown in popularity to accommodate an increasingly diverse workforce.
  • Financial well-being benefits (e.g., mortgage or rent assistance, credit improvement) will be added, and more than 50% of employers will offer student loan repayment programs.
  • More than 40% of employers will offer an emergency savings fund mechanism.
  • More than two-thirds of employers will offer health savings accounts (HSAs).
  • Nearly 40% of employers will offer gap insurance to help employees who lack the means to fund an HSA.
  • Organizations that offer employment flexibility and mobility will have a competitive advantage in the race for talent.
  • The performance gap will widen between employers able to offer the flexible total rewards program of the future and those that simply cannot.

“Growth opportunities abound over the next four years as the labor shortage continues, and the demand for more generous and comprehensive rewards programs rises,” observes Phil Eckman, President of Workplace Solutions at Transamerica. “Growing demand and government mandates will place pressure on smaller employers with fewer than 100 employees to offer retirement benefits. In this context, it will behoove employers to select retirement plans, employee benefits, and partners, who can help them migrate toward a more inclusive benefits program.”