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New 403(b) Survey Finds Most Organizations Staying the Course With Retirement Plans Despite COVID-19

The vast majority (83.6%) of non-profit organizations with 403(b) plans are holding steady and not changing their contribution levels despite the financial pressures of the COVID-19 pandemic, according to a new Plan Sponsor Council of America (PSCA) snapshot survey, sponsored by Principal Financial Group®.

“The survey shows that while most non-profits have been able to sustain their commitment to retirement plan contributions, those in the health care and education sectors have been disproportionally affected by the pandemic,” said Hattie Greenan, director of research and communications at PSCA. “Those organizations are more likely to be considering reducing or suspending plan contributions and, at the same time, workers in those sectors were noticeably more likely to have taken loans and withdrawals from their retirement savings.”

PSCA conducted a snapshot survey of nearly 300 non-profit organizations in October 2020 to determine what impact the COVID-19 pandemic and resulting economic conditions are having on 403(b) plans and their participants.

“Through this pandemic, we have seen the adaptability of employers and employees in the non-profit sector,” said Kevin Morris, vice president and chief marketing officer, Retirement and Income Solutions at Principal®. “We are seeing consultants and financial professionals help employers navigate decisions about their retirement plans and ensure that employees’ savings needs are being considered.”

Report Highlights

Employer Contributions

Percent of changes being made or planned to employer contributions by year-end as a result of the COVID-19 pandemic

  • None (83.6%)
  • Suspend Matching contributions (6.3%)
  • Suspend Non-Matching Contributions (4.1%)
  • Reduce Matching Contributions (3.4%)
  • Reduce Non-Matching Contributions (3.4%)

The vast majority of organizations (83.6%) will not be changing the employer contributions to 403(b) plans this year. However, nearly a third of higher education institutions say they either have, or will by year-end, reduce or suspend contributions to their 403(b) plans. Ten percent of all respondents have suspended or reduced the matching contribution and 7.5% have suspended or reduced the non-matching contribution (some plans have both types of contributions).

Loans and Withdrawals

Percent of non-profit organizations noting increase in hardship withdrawals since COVID-19 by industry type

  • Health care and Hospitals (52.2%)
  • Higher Education (including faith-based) (36.0%)
  • Research, Science, or Environmental (31.3%)
  • K-12 Education (18.5%)
  • Other (15.8%)

Similarly, while three-fourths of plans indicated they have not noted an increase in plan loan activity since the beginning of COVID-19, just more than a third (36.0%) of hospitals and health care organizations noted an increase, as did nearly 30% of higher education institutions. However, those sectors were a relatively small sampling of the overall survey.

While more than 70% of organizations reported no change in the volume of hardship and in-service withdrawals this year, more than half (52.2%) of hospital and health care systems did cite an increase in participants tapping their accounts. More than a third of higher education institutions also noted an increase.

“These findings, with most organizations making no changes to their retirement benefits and contribution levels, are reflective of what we see at Principal,” said Morris. “Employers continue to see the value of supporting employees to pay their future selves.”

The full report is available for download at

About Principal®

Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals—offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at

About the Plan Sponsor Council of America

The Plan Sponsor Council of America (PSCA), part of The American Retirement Association, is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans.

Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, member SIPC and/or independent broker/-dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. PSCA and Hattie Greenan are not an affiliate of any company of the Principal Financial Group.

Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.


Michael DuPré, or 515.878.7962

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