A lower number of defined contribution (DC) plan sponsors are prioritizing reducing plan costs, new findings from an Escalent report say.
According to research from the 2025 Retirement Planscape, 40% of plan sponsors listed decreasing costs as a key focus for the coming year—a serious decline compared to 2024’s 50%.
Instead, plan sponsors are shifting their attention towards other opportunities in cybersecurity and artificial intelligence (AI), especially as a growing number of employers fear data hacks and cyberattacks. Seventy percent of all plan sponsors surveyed and 10% of large-mega plans say they’ve experienced a 401(k)-related data breach in the past year.
Further, cybersecurity threats and data breaches were counted as a leading worry for plan sponsors, at 52% of all surveyed. This was ahead of plan investment options underperforming (45%) and employees not saving enough for retirement (43%).
As 401(k) plan providers embrace digitalization in the industry, government agencies have evolved their guidance to curb the risk of cyberattacks. In September 2024, the U.S. Department of Labor announced updates to cybersecurity guidance for plan sponsors and fiduciaries to also now include health and welfare plans.
“Technology is advancing quickly, forcing plan sponsors to adapt in real-time. Cybersecurity is the most daunting fear among this demographic, especially as AI introduces new challenges around data protection,” said Sonia Davis, lead report author and senior product director in Escalent’s Cogent Syndicated division. “Many plan sponsors are vying to wrap their arms around these risks, establishing formal protocols and strengthening safeguards. The potential for litigation tied to breaches, fiduciary lapses, or compliance issues only adds to the pressure.”
Others, and especially among large-mega plans, expressed enthusiasm for the rising presence of AI in the industry. Two-thirds (66%) of plan sponsors who manage $100 million or more in assets believe AI-powered virtual assistants could answer common questions about 401(k)s and say that AI platforms can “deliver more dynamic and tailored simulations, and offer a more interactive, personalized planning experience for participants.”
Employers are also banking on plan advisor partners to embed AI technology into their practices. Respondents said they would like to see a greater number of AI-enabled solutions from their current plan provider or DC investment manager.
“The rising enthusiasm around AI presents an opportunity for providers to invest in tools that improve the 401(k) experience with increased support, education and a higher degree of personalization,” said Davis. “The challenge will be in helping sponsors navigate this evolution intentionally, in a way that balances innovation with effective risk management.”
SEE ALSO:
Why Cybersecurity Matters More than Ever for Plan Sponsors and 401(k) Plans
EBSA Updates Cybersecurity Guidance for Plan Sponsors and Fiduciaries
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
