11 Retirement Plan Trends for 2025

Staying on trend is not easy, especially when it comes to your company’s retirement plan. Modern strategies can transform retirement plans into powerful tools for long-term financial security. Employers are facing new employee expectations, regulations, and economic shifts. They must stay competitive to attract and keep top talent. For plan sponsors, understanding these changes isn’t just helpful, it’s essential. Explore these most popular 11 retirement plan trends for 2025 to uncover valuable insights you can act on.

1. Personalized financial wellness programs

Financial wellness is becoming more personalized to meet the diverse needs of employees. It’s no longer a one-size-fits-all solution. Employers turning their focus to targeted tools to help participants manage debt, save for retirement, and reach broader financial goals. A recent survey shows that 92% of employers plan to prioritize financial wellness in 2025,¹ yet only 36% offer financial education.² Personalization can increase employee engagement and financial security.

Financial wellness trends on the horizon:

• Offer customized financial education based on age, income, or career stage.
• Implement tools like debt management resources and savings calculators.
• Seek an advisory firm that offers employee workshops, webinars, and digital content.

2.  Increased focus on specialty investments

To meet diverse needs, plan sponsors are starting to focus on specialty investments. This also requires careful vetting processes to ensure compliance with ERISA standards. There is growing interest in alternative options, such as:

• Managed Accounts
• Environmental, Social, and Governance (ESG)
• Private equity funds
• Real estate funds
• Religious-based investments

According to the Plan Sponsor Council of America, many plan sponsors are exploring alternatives. Over 20% of plans are considering adding non-traditional investment options in the coming year.³

Specialty funds let employees match their retirement investments with their values or goals. This adds flexibility to their portfolios. However, plan sponsors must assess these options carefully. They need to ensure compliance with fiduciary rules and provide long-term value.

One example of the risks involved comes from a recent Texas District Court case. The court found that the ESG elements of American Airlines’ 401(k) plans violated ERISA fiduciary duties. This case highlights the importance of following ERISA’s guidelines when adding specialty funds to retirement plans.

Similarly, adding volatile assets like Bitcoin or illiquid investments like private real estate can introduce significant fiduciary risks. Without clear due diligence and compliance processes, plan sponsors could inadvertently expose participants to excessive risk or regulatory violations.

Plan sponsors should take the time to review all investment options to make sure they meet legal and regulatory standards. Remember, even investments that align with values must undergo proper due diligence. Mercer Advisors is here to help by looking at fund performance, evaluating fees, and ensuring processes follow ERISA best practices.

Mercer Advisors process includes:

• Evaluating the fund’s historical performance
• Measuring associated fees
• Assessing alignment with the plan’s objectives
• Documenting compliance with ERISA fiduciary standards

Regular monitoring and clear documentation are also important. These steps help plan sponsors make informed decisions and reduce legal risks.

3. Financial literacy because it’s the right thing to do

Financial literacy remains a cornerstone of successful retirement planning. The Employee Benefit Research Institute (EBRI) calls for better financial education. Many participants lack a grasp of retirement planning concepts. This can hurt their retirement readiness. Effective initiatives include offering:

• Interactive workshops
• Personalized financial coaching
• On-demand video tutorials covering topics such as budgeting, investment basics, and retirement strategies

With these resources, participants can learn how to make smart money choices. They also get the support they need to stay on track with their retirement goals.

While it’s often cited that financial literacy initiatives are driven by a need to boost employee absenteeism and presentism (the act of being present on the job but not actually working due to financial stress). Which is costing employers about 3 hours per week per stressed employee, or roughly $2,000 per employee, that’s not the “why” behind why employers offer financial wellness programs. Rather, it’s a more human response because it’s the right thing to do.

Mercer Advisors provides programs to help participants take charge of their future. These programs include workshops, webinars, and tools to track progress.

4. Health Savings Accounts (HSAs)

Employers understand the relationship between health and wealth. This has led to greater attention given to the relationship between saving for retirement and preparing for the costs of healthcare in retirement.⁴ For couples, the average healthcare cost is expected to range between $351,000 – $413,000. Then with healthcare premiums rising 47% from 2013 to 2023, HSAs are becoming a key tool for managing healthcare costs in retirement.⁵

Nearly nine out of 10 employers want to help employees understand how to use HSAs for long-term savings. Employers want to empower employees through education and tools. They aim to help employees maximize the tax benefits of HSAs. This can help better prepare them for healthcare costs in retirement.

By offering simple tools and education, employers aim to help employees get the most from HSAs. This includes teaching how to use the tax benefits and save for future healthcare costs. The goal is to help employees feel more prepared for retirement.

Considerations for plan sponsors

• Offer education about the triple tax benefits of HSAs and how they could be used as long-term savings vehicles.
• Teach how HSAs can be used as long-term savings vehicles.
• Educate participants on HSA investment strategies and available options.
• Provide tools to help employees plan for healthcare expenses in retirement.

5. Adoption of SECURE 2.0 Provisions

The SECURE 2.0 Act includes new provisions designed to increase employee retirement savings. One key change is mandatory automatic enrollment for new 401(k) and 403(b) plans. Employees will start with a contribution rate of 3% to 10%, which will automatically increase by 1% each year. This continues until the rate reaches at least 10%, but no more than 15%.

Other provisions that are gaining attention from plan sponsors include:

• Hardship self-certification
• Increased force-out limit for vested balances up to $7,000 in DC plan- Employer match to Roth
  – Automatic enrollment requirements
  – Higher catch-up limit for employees 60 – 63 years old

• Increased RMD age
• Student loan matching

6. Enhanced plan design flexibility

Automatic features like auto-enrollment and auto-escalation are becoming standard. Flexible plan designs boost participation and savings rates, especially in small businesses. Roth conversion options are also gaining traction as employees focus on future tax considerations.

Considerations for plan sponsors

• Add auto-enrollment at 3% to 10% contribution rates with automatic escalation.
• Consider Roth options for employer matches.
• Communicate the benefits of these features to participants.

7. High-income earners and tax advantaged accounts

High-income earners often face unique challenges when it comes to retirement planning. However, there are tax-favored accounts available that provide opportunities for significant savings beyond traditional limits.

Solutions to maximize savings and reduce taxes may include:

• Non-Qualified Deferred Compensation (NQDC) Plans: Allows high-income earners to defer a portion of their salary or bonuses until retirement or another specified time. Unlike 401(k)s, these plans are not subject to annual contribution limits.
• Cash Balance Plans: These plans allow for higher contribution limits than 401(k)s, particularly for older participants. A cash balance plan is a type of defined benefit plan where contributions are made by the employer into individual accounts, typically based on a percentage of the employee’s salary.
• Employee Stock Ownership Plans (ESOPs): An ESOP is a retirement plan where employees receive ownership shares in their company as part of their compensation. Contributions to the ESOP are tax-deductible for the company, and employees receive the stock on a tax-deferred basis until they sell it.
• Backdoor Roth IRA: A strategy for high-income earners to contribute to a Roth IRA, even if they exceed the income limits. It involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA. While this method avoids income limitations, taxes may apply on any pre-tax amounts converted.

These strategies may help high-income earners save effectively while aligning with long-term financial goals.

8. Advanced use of AI and technology

Technology is changing how employees plan for retirement. Tools like AI calculators, mobile apps, and virtual education sessions can make it easier to get personalized advice and information.

Plan sponsors are also using analytics to improve retirement plans. These tools help them see how well the plan works, understand participant behavior, and make better decisions.

The Department of Labor has emphasized the importance of ethical AI in retirement planning, requiring AI tools to be transparent, unbiased, and rigorously tested to protect participants.

When used responsibly, technology can make retirement planning easier and more effective. It helps employees feel more confident about their future.

Considerations for plan sponsors

• Offer tools like mobile apps and retirement calculators for employees.
• Use data to track plan success and understand participant needs.
• Be mindful and intentional with AI systems so that they are fair, clear, and tested for accuracy.

9. Focus on retirement income solutions

With nearly one in five employees being Baby Boomers,⁶ retirement planning initiatives are top of mind. Plan sponsors should think about adding retirement income solutions to defined contribution plans. Over the last ten years, there has been a surge in new ideas for these solutions. Products like hybrid target-date funds and annuity marketplaces are examples of this innovation. The interest from plan sponsors, providers, and participants has driven this change.

Assist employees nearing retirement in safeguarding their savings against these five common risks:

1. Outliving their money
2. Market fluctuations
3. Inconsistent income
4. Inflation risk
5. Liquidity concerns

As participants near retirement, the emphasis on decumulation strategies grows. To help, many employers now offer in-plan solutions like annuities and managed payout funds. These options are designed to help manage savings during retirement.

10. Identify and close savings gaps

Employers are diving deep into participation rates among diverse demographic groups. Their goal? Uncover gaps and work toward accessible retirement benefits for all.

Retirement plan committees are recognizing the need to address disparities in retirement readiness. By focusing on equitable access and outcomes, they can help all employees build a more secure future.

Considerations for plan sponsors

• Analyze participation data to uncover gaps.
• Create initiatives to improve access for underrepresented groups.
• Offer inclusive education and outreach programs to support all employees.

11. Cybersecurity as a priority

As digital tools become more common, cybersecurity is a top priority for 2025. Plan sponsors must protect participant data and prevent fraud to maintain trust and avoid legal risks.

Key steps include regular risk assessments, multi-factor authentication (MFA), and data encryption. Training employees on cybersecurity best practices is also essential to strengthen defenses.

Advanced technologies, like AI-based threat detection, can help identify risks early. Partnering with cybersecurity firms adds an extra layer of protection against new threats.

Considerations for plan sponsors

• Conduct regular risk assessments and provide employee training.
• Use multi-factor authentication and encrypt sensitive data.
• Work with cybersecurity experts to detect and prevent threats.
• Vet service providers to ensure they have documented cybersecurity protocols.

By taking these steps, plan sponsors can safeguard participant data and build confidence in their retirement plans.

Looking ahead

Enhance the potential of your workplace retirement plan by collaborating with a partner that specializes in simplifying complex tasks for your company and employees. By embracing these trends, employers can design plans that meet regulatory requirements and enhance participant outcomes.

If you have questions about the latest retirement plan trends or how to align your plan with these developments, contact your advisor. If you are not a client and would like to learn more, let’s talk.

¹ Alight Solutions. “2025 Hot Topics in Retirement and Financial Wellbeing.” 2025.

² PNC. “2024 Financial Wellness in the Workplace Report: The Evolving Needs of the Multigenerational American Workforce.” 2024.

³ PSCA. “Plan Sponsor Interest in Alternatives, Private Equity, ESG, and More.” 18 Nov 2024.

⁴ Employee Benefit Research Institute, 2024 (estimate is based on savings needed to cover premiums for Medicare Part B and Part D, the Part B deductible, premiums for Medigap Plan G, and median out-of-pocket prescription drug expenses) https://www.ebri.org/retirement/content/new-research-report-finds-projected-savings-medicare-beneficiaries-need-for-health-expenses-increased-again-in-2023

⁵ Alight Solutions. “2025 Hot Topics in Retirement and Financial Wellbeing.” 2024.

⁶ U.S. Department of Labor. “Trendlines: Changes in the U.S. Labor Supply.” Aug. 2024.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate, but is not guaranteed or warranted by Mercer Advisors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.