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Hewitt Survey Reveals New Employer Trends in Retirement; Automated Features Continue to Play Key Role in 2006 as Companies Lose Confidence in Workers' Ability to Save for RetirementPosted by Roth-IRA-401k on: 2006-01-13 10:09:18 in category:
Retirement Headlines [ Print | Permalink / 0 Comment(s) ] Hewitt Survey Reveals New Employer Trends in Retirement; Automated Features Continue to Play Key Role in 2006 as Companies Lose Confidence in Workers' Ability to Save for Retirement LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Despite continued efforts to educate employees on the importance of saving for retirement, many companies do not feel workers are stepping up to the challenge, according to a new study by Hewitt Associates, a global human resources services firm. To address these concerns, an increasing number of companies are implementing automated features that make retirement saving a reactive decision rather than a proactive one. Hewitt's study of more than 220 large U.S. companies reveals that only 6 percent are confident their employees will take accountability for their own retirement future this year, down from 12 percent in 2005. In order to encourage workers to take control of their retirement savings, 23 percent of companies are very likely to add automatic enrollment features in their 401(k) plans by the end of the year. Thirteen percent of companies are very likely to add contribution escalation features, and one in five companies (20 percent) plan to add automatic rebalancing of 401(k) accounts. "Companies that have already implemented automatic features to their 401(k) plans have seen significant results in helping employees save and invest better for retirement. This is creating momentum and prompting other companies to consider them as well," said Lori Lucas, director of participant research at Hewitt Associates. "Automated features change the equation so that inertia around retirement saving and investing works in employees' favor: if an employee does nothing, it is ok because the 401(k) plan is on autopilot." Link to Changes in Pension Plans According to Hewitt's study, the majority of companies offering pension plans are not likely to make changes to them in 2006. However, 15 percent say they are very likely to close participation to new employees, 6 percent say they are very likely to freeze accruals, and 5 percent are very likely to change the design of their pension plan. "As employers reduce their pension benefits, the 401(k) plan becomes an even more critical savings vehicle," said Lucas. "Effectively, it means that workers need to be doing a lot more when it comes to saving for retirement--and that's why it's important for companies to support workers' efforts through 401(k) plan design, delivery and communication." Education and Communication Efforts Remain a Key Priority In addition to automating the 401(k) plan, many companies will continue to educate workers on the value of saving in their plan this year. The majority of companies (96 percent) say they are somewhat or very likely to focus on making sure their employees understand how their 401(k) plan works and the value of it. Nearly two-thirds (64 percent) say they are somewhat or very likely to encourage long-term saving by educating workers on the advantages of preserving their retirement wealth when leaving the company. In addition, 16 percent of companies say they are very likely to add online third-party investment advisory services to employees, enabling them to tap into financial experts who can assist them with retirement saving and planning. Other Key Findings -- Only 13 percent of companies say they are very likely to add a Roth 401(k) in 2006. Reasons cited by employers for not offering a Roth 401(k) this year included administrative complexity, vague guidelines, concerns about lack of use by employees, and difficulties communicating the Roth 401(k). -- Six percent of companies say they are very likely to add annuities as a form of payment option in 2006. -- Sixteen percent of companies offering company stock will either limit employees' investment in company stock or eliminate it as an investment option in 2006. -- Consistent with last year, the majority of companies (79 percent) say they plan to make no changes to their company match. Eight percent say they plan to add/increase the company match, and only 1 percent say they plan to reduce or eliminate the company match. About Hewitt Associates With more than 60 years of experience, Hewitt Associates (NYSE:HEW) is the world's foremost provider of human resources outsourcing and consulting services. The firm consults with more than 2,400 companies and administers human resources, health care, payroll and retirement programs on behalf of more than 350 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 22,000 associates. For more information, please visit www.hewitt.com. Contacts Hewitt Associates Maurissa Kanter, 847-442-7656 maurissa.kanter@hewitt.com Kristen Polich, 847-442-7648 kristen.polich@hewitt.com Recommended Websites Open Community Website http://www.business-business.biz http://www.investment-investment.us http://www.retirement-retirement.com Recommended Websites Your custom Retirement Planning. http://www.retirement-plan.us For planning an IRA Rollover this is the website to review. http://www.ira-rollover.us Professional asset allocation and the wonders it can do. http://www.asset-allocation.us Money Managers selected to fit your needs. http://www.money-managers.us Manager with strong national performance rankings. http://www.durig http://www.roth-ira.us |
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