Retirement plan sponsors are betting big on artificial intelligence while simultaneously grappling with rising costs and litigation risks, according to new research from Mercer that surveyed 225 U.S. defined contribution plan decision-makers.

The findings paint a picture of benefits leaders evolving from plan administrators into strategic technology adopters, with 44% identifying AI as the technology that will have the biggest impact on their plan’s success over the next three to five years. Another 67% are actively exploring or implementing AI and advanced analytics into their plan strategy.

“Plan sponsors are looking to harness this technology to their benefit,” the report states, noting that AI applications could range from enhanced investment analytics and automated administrative tasks to personalized participant guidance and fraud detection.

However, AI isn’t the only story here. The survey uncovered several notable trends that illustrate how plan sponsors are evolving their roles, from traditional plan administration to risk management. Below are five essential points from the report.

Financial wellness emerges as top priority

When asked to define their top three priorities for the coming year, 39% of respondents cited expanding financial wellness programs as their No. 1 focus. The emphasis reflects growing employee anxiety about retirement readiness, with nearly 60% of employees across all generations concerned about being financially able to retire, according to Mercer’s 2025 Health on Demand survey.

The concern is validated by separate research from the Employee Benefit Research Institute, which found that only 67% of workers feel confident they will have enough money to live comfortably throughout retirement. EBRI’s 2025 Retirement Confidence Survey, which questioned around 2,700 workers and retirees, also revealed that 81% of workers are concerned that the increasing cost of living will make it harder to save as much as they want, while 56% agree that the cost of healthcare is negatively impacting their ability to save.

Mercer researchers found that the focus on financial wellness appears justified. Among respondents with existing programs, 68% said their program was meeting expectations, while about a quarter said it had exceeded expectations. Looking ahead, 58% of plans are likely to expand their financial wellness offerings over the next 12 months.

Recordkeepers play a central role in delivering these programs, with just over half of sponsors passing full responsibility for financial wellness solutions to their recordkeeper, while another 42% rely on recordkeepers working in tandem with other providers.

The delegation trend accelerates

A striking 83% of respondents are considering partial or full delegation of their plan management, with 63% looking at partial delegation and 20% considering full delegation. Currently, 84% of companies already rely on external consultants or advisors in some capacity.

The shift toward delegation suggests measurable benefits. Over half of plan sponsors report benefiting from their consultant’s ability to secure lower fee share classes, with 72% achieving discounts in the range of five to 10 basis points.

Interest in multiple employer plans and pooled employer plans is also growing, with 36% considering a switch and another 31% saying they may do so in the future. Among those taking action to reduce costs, 29% are using or considering MEP or PEP structures.

Rising legal and cyber risks drive retirement plan governance focus

The research reveals persistent legal challenges, with 19% of respondents having faced litigation or legal action in the past five years. The majority of cases settled out of court, but the impact on insurance costs has been significant, with 61% of companies reporting notable increases in fiduciary liability insurance premiums over the past five years.

However, delegation can help mitigate these costs. Nearly half of respondents employing a 3(38) or 402(a) fiduciary report a reduction in insurance premiums as a result.

“Courts are now scrutinizing areas such as the use and oversight of managed accounts, as well as the finer details of plan administration,” the Mercer report notes. “This evolution highlights the critical need for sponsors to ensure that their governance frameworks and administrative practices are not only robust but also thoroughly documented.”

The heightened concern about fiduciary responsibility comes as participants themselves worry about broader retirement system changes. According to EBRI research, 79% of workers and 71% of retirees are concerned about the U.S. government making significant changes to the American retirement system, with 60% of concerned workers specifically worried about Social Security benefit reductions.

Budgets climb even as sponsors look to rein in costs

Plan sponsors are bracing for higher budgets in the year ahead, even amid mounting pressure to control expenses. Three-quarters expect a slight or significant increase in their plan budgets, with larger plans anticipating the biggest jumps, according to Mercer. Only 3% foresee a slight decrease, and none expect a major cut.

Still, cost containment remains top of mind. Seventy percent say they’re taking or planning steps to lower plan costs. More than half are weighing changes to plan design features such as vesting schedules or automatic enrollment, while more than a third are considering workforce reductions, though those moves appear driven by broader business needs rather than direct plan savings.

When it comes to investment decisions, performance clearly outweighs price. Nearly half of respondents cite historical performance as their top priority, followed by diversification and manager reputation. Just 9% rank the lowest fees as most important. Among those focused on performance, 41% judge success against benchmarks, while 33% look to participant outcomes like retirement readiness.

“The signal is clear: It is performance, both in terms of returns and participant outcomes, that drives plan sponsors’ decision making, not fees,” the Mercer report concludes.

Guaranteed income options gain traction with retirement plans

The Mercer survey found growing interest in retirement income solutions, with 35% of sponsors listing adding retirement income solutions among their top three priorities over the next 12 months.

This aligns with worker demand. EBRI research found that three-fourths of workers are interested in a default investment option that includes an allocation to guaranteed lifetime income, and 55% expect a guaranteed income product to be a source of income in retirement. However, only one-third of current retirees actually use such products, suggesting a gap between expectation and implementation.

Among workers contributing to employer retirement savings plans, a quarter expect to use their workplace savings to purchase a product that guarantees monthly income for life once they retire, according to EBRI.

Growing focus on total financial wellness

The Mercer survey highlighted increasing interest in helping participants prepare for short-term financial needs alongside retirement savings. EBRI research found that one in five workers has taken a loan or withdrawal from their retirement plan, often to pay for unforeseen circumstances such as home or car repairs, making ends meet or covering medical expenses.

Looking forward, 71% of workers said they would utilize an employer-sponsored emergency savings account through payroll deduction, according to EBRI, suggesting strong demand for this relatively new plan feature.

While 38% of respondents in the Mercer survey wish their recordkeepers would provide better financial wellness resources, EBRI data suggests specific gaps in healthcare planning. Only 40% of workers have calculated how much money they will need to cover health expenses in retirement, and just one in four have long-term care insurance.

The planning gap has real consequences. EBRI found that more than a third of retirees say their healthcare and dental expenses have been higher than expected in retirement.
“Running a DC plan can be challenging, but when done correctly, the difference it can make to participants is truly life-changing,” the Mercer report states.