Nonprofit leaders are bracing for a potential workforce brain drain from retiring baby boomers during the next five years, with two-thirds expecting some kind of impact on their organizations.
Results of a new survey of 403(b) plan sponsors by the Plan Sponsor Council of America (PSCA) and sponsored by the Principal Financial Group, shows that most (69 percent) plan to replace the majority of retirees but more than one-third (38 percent) expect recruiting challenges.
“Many nonprofit organizations rely heavily on 403(b) plans — instead of salaries — to compete for the best employees,” said Bob Benish, executive director of PSCA. “We’ve seen 403(b) plans improve dramatically over recent years. It is clear those plans will be increasingly important in the race for high performers, especially in higher educational institutions.”
More than half of all 403(b) sponsor respondents (54.4 percent) expect between 10 and 20 percent of their workforce to retire during the next five years. However, 20 percent of larger organizations (500 or more employees) expect to lose one-fifth of their workforce to retirement. Most are higher educational institutions where a spike in hiring professors in the 1970s and 1980s is leading to a significant number of potential retirements in the near future.
“As a generation of academics nears retirement, financial professionals have another reason to focus on higher education as an opportunity to grow their business,” said Aaron Friedman, national tax-exempt practice leader, The Principal.
In addition to concerns regarding recruiting, the other top anticipated challenges include:
- An increased need for training (42.7 percent);
- Skill gaps in the workforce (39.9) percent;
- The reallocation of responsibilities causing a burden on remaining employees (38.1 percent);
- Increased use of technology (33.5 percent); and,
- Helping employees help themselves.
While seven out of 10 plan sponsors believe planning for retirement is the employees’ responsibility, two-thirds (66.8 percent) provide retirement planning education — including nearly 90 percent of large organizations.