5 Competing Priorities for Retirement Plan Sponsors in 2025

As we step into 2025, retirement plan sponsors find themselves at a crossroads: of innovation and responsibility. Of balancing regulatory changes, addressing rising litigation risks, and ensuring plan design features truly engage employees rather than foster complacency. The ever-shifting landscape of regulations, employee expectations, and emerging trends demands sharper focus and smarter decisions to keep retirement programs compliant. For the third year (2023, 2024), we’re diving into the "Five Competing Priorities" that define the retirement plan conversation that Plan Sponsors need to be considering. These priorities aren’t just check-the-box items—they’re the dynamic challenges and opportunities shaping the future of how we support employees and safeguard their financial well-being

1. SECURE 2.0 Optional Provisions: To Adopt or Not to Adopt?

With SECURE 2.0 continuing to roll out, 2025 introduces new optional provisions, for example Student Loan Matching or Emergency Savings solutions. For plan sponsors, the challenge lies in deciding which provisions to adopt to meet the needs of their existing and potential future workforce while balancing often yet undefined administrative complexity and costs. Do these enhancements align with your organization’s goals and employees' priorities, or are they potential solutions that might overly complicate your retirement plan strategy? Sponsors must also keep apprised as guidance around these provisions continues to emerge from the Department of Labor and Treasury.

2. Evaluating Retirement Plan Expenses: Forfeitures, Fees, and Litigation

Litigation trends show no signs of slowing in 2025, with excessive fee and forfeiture claims ultimately highlighting the continued conversation around how plan expenses are structured remaining in the crosshairs. Plan sponsors must carefully evaluate whether their plans are operating efficiently and equitably, and when passing plan level expenses onto participants, are the fees determined to be reasonable and clearly communicated to participants? Are forfeitures being used properly, as defined in their plan documents; such as to offset plan expenses or fund matching contributions? These questions are not just fiduciary obligations—they're protective measures to avoid costly litigation and reputational damage. Regular plan reviews and fee benchmarking can help retirement committees remain ahead of these legal trends.

3. Automatic Features: Driving Engagement or Fostering Stagnancy?

Automatic enrollment and automatic escalation have long been lauded as tools to boost participation and savings rates. When we look at slices of diversity reporting, automatic enrollment and escalation are responsible for minority participants "leveling the playing field" and saving at replacement income rates comparable to their colleagues.

But as more plans implement these features as mandatory components, sponsors should start to ask: Are they fostering meaningful results or does automation allow participants to become disengaged and stagnant in their contributions, assuming someone else is doing the calculation of what they'll need to save to be adequately prepared in retirement for them? With the rise of personalization in benefits, 2025 presents an opportunity to reevaluate whether automatic features alone are achieving their intended goals. Sponsors should consider how targeted communication and education can supplement these level-setting provisions to ensure employees remain actively engaged in planning for their retirement.

4. The Integration of Private Equity into Retirement Plans

Private equity (PE) is increasingly influencing the retirement plan industry in two significant ways: as a potential investment option within 401(k)s and through the consolidation of plan advisory firms into large-scale aggregator firms. While PE investments may offer the promise of higher returns and portfolio diversification, they also introduce higher fees, limited liquidity, and increased complexity that plan sponsors must evaluate carefully to ensure they meet fiduciary obligations. Simultaneously, the acquisition of advisory practices "super aggregators" by PE-backed capital raises questions about the independence and appropriateness of advisory services and advice, especially for small- to mid-sized employers. As these trends evolve, plan sponsors should weigh the benefits and risks thoughtfully while ensuring their retirement plan remains aligned with participant needs and organizational goals.

5. What's Going on in Washington: The 2025 Version

As key provisions from SECURE 2.0 have been in 2023 & 2024, and continue to take effect, the conversation may turn to future legislative efforts to enhance retirement savings, such as additional tax incentives for employers, trending towards parity in 403(b) plans as compared to their 401(k) counterparts, or greater permissive retirement plan access for workers. For Sponsors, keeping a pulse on legislative guidance from Treasury and the DOL will be critical to staying compliant and ahead of the curve. Meanwhile, the change in administration and balance of power in Congress could influence priorities, such as reevaluating Environmental, Social, and Governance (ESG) investing rules or considering additional reporting requirements for plan sponsors. ESG continues to be a dynamic area with shifting regulatory guidance between Washington and the Circuit Courts. Given the shifting winds in generational investing priorities, and the devastation this past fall in Florida and North Carolina, as well as the LA fires earlier this month, mission-driven businesses may be further interested in exploring the ability to provide employees the opportunity to invest their values within their retirement plan investment lineup. And, of course, with the continued digitization of retirement plan management comes increased risks of data breaches and cyberattacks. Regulatory bodies, including the Department of Labor, are likely to intensify their focus on cybersecurity best practices.

We understand the competing priorities that retirement plan sponsors face. As co-fiduciaries, we stand alongside you to help navigate these changes, ensuring that your plan remains compliant, competitive, and reflective of your organization’s values. Let’s start the conversation. Contact us at Christina.Tunison@lpl.com.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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