Cost Concerns Ease as AI Moves Up the Agenda for DC Plan Sponsors
Defined contribution (DC) plan sponsors are shifting focus away from cost reduction. While managing expenses remains important, only 40% of sponsors now prioritize cost control for the coming year, down from 50% in 2024. This change reflects a broader strategic adjustment as sponsors address new challenges like cybersecurity and artificial intelligence (AI).
These findings come from the 2025 Retirement Planscape®, a report by Escalent’s Cogent Syndicated division. The annual study tracks trends among plan sponsors and evaluates DC plan providers and investment managers based on brand reputation and service quality, offering insight into sponsors’ evolving priorities.
Cybersecurity Takes Center Stage
Technology advancements are driving plan sponsors to adapt quickly. Cybersecurity tops the list of concerns, especially with AI introducing fresh risks related to data protection. Sponsors are responding by implementing formal security protocols and strengthening safeguards to reduce the risk of breaches, fiduciary lapses, and compliance failures.
Recent data shows that 7% of all plan sponsors and 10% of Large-Mega plans experienced a 401(k)-related data breach in the past year. Cybersecurity threats remain the leading worry (52%), followed by underperforming investment options (45%) and employees not saving enough for retirement (43%).
After a breach, most sponsors first contact their plan provider, then take corrective actions, notify law enforcement, insurers, and plan participants.
Growing Optimism Toward AI
Despite cybersecurity concerns, there is clear optimism about AI’s role in transforming retirement plans. Larger plans, managing $100 million or more in assets, show strong interest in AI-driven tools. Two-thirds believe AI-powered virtual assistants can effectively answer common 401(k) questions and expect AI to deliver more dynamic, interactive, and personalized participant experiences.
Feedback from sponsors highlights demand for AI-enabled services. Examples include requests for “AI-powered investment real-time trackers and advice” and “fully integrated AI financial advisors,” showing a readiness to adopt technology that enhances plan management and participant engagement.
Strategic Shift with Technology at the Forefront
As cost pressures lessen, sponsors have room to plan strategically. AI presents an opportunity to improve support, education, and personalization in 401(k) plans. The key challenge lies in balancing innovation with effective risk management to protect participant interests.
About Retirement Planscape®
Escalent conducted an online survey of 1,350 401(k) plan sponsors between February 20 and March 17, 2025. Participants had responsibilities related to plan design, administration, or provider and investment manager selection. The sample was drawn using recent Form 5500 filings and adjusted to represent the 401(k) plan sponsor universe by assets, participant numbers, industry, and geography. The margin of error is ±2.67% at a 95% confidence level.
About Escalent
Escalent is a data analytics and advisory firm focused on industries experiencing disruption and transformation. With over 40 years of experience and a team of 1,600 across multiple countries, Escalent combines various data sources to drive growth and provide consulting services from insights to implementation. Headquartered in Livonia, Michigan, the firm operates globally with locations in the US, Australia, Canada, China, India, Ireland, the Philippines, Singapore, South Africa, UAE, and the UK. Learn more at escalent.co.
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