upfront
IMPROVE MEANTS
sponsors enhancing Dc plans to help workers save
emplOyeRs doubt their employees’
ability to save successfully for retirement and are embracing solutions to help
rethink their retirement benefits plan strategies to assist employees.
managed account with a drawdown feature
or a managed payout fund—while 9% offer
an out-of-plan option.
Just 4% of employers are very confident
that their workers will retire with adequate
retirement assets, down substantially from
30% in 2011, according to an Aon Hewitt
study. Additionally, only 10% of plan sponsors feel very confident their employees
are taking accountability for their own
retirement success. Fewer than one in five
employers (18%) are confident that workers will be able to manage their income
during retirement.
are subject to automatic enrollment, most
(63%) aren’t saving enough to get the
full employer match. In response, nearly
one quarter (24%) of employers plan to
make changes to their automatic feature
in 2012. Of those making changes, 26%
will apply automatic enrollment to existing
nonparticipants, 26% will add an automatic contribution escalation feature and
24% will increase the initial default rate.
Looking ahead, 22% plan to adopt one
of these solutions in 2012. Further, 42%
of employers allow employees to elect an
automatic payment option from the plan
over an extended period of time. Nearly
one quarter (24%) are likely to add this
option in 2012.
More than half (52%) of employers indicated they will focus on encouraging
workers to take greater accountability
for their retirement savings in the year
ahead, but they aren’t asking employees to do it all on their own. Nearly half
(44%) of employers will focus on helping
workers retire with enough money and
most (60%) say they will place a greater
emphasis on helping employees understand and use the employer-provided
resources available to them.
As employers have moved away from offer-
ing defined benefit (DB) plans in favor of
DC plans, workers now are left with an
annuity gap once filled by DB plans. As a
result, more plan sponsors are introducing
retirement income solutions either outside,
within or alongside the plan. Currently, 16%
of employers offer an “in-plan” income solu-
tion—including either an insurance product,
Beyond offering retirement income solu-
tions, employers increasingly are trying to
help workers understand how much they
can spend each year during retirement.
Nearly three quarters (71%) of plans pro-
vide online modeling tools for this purpose,
and 64% are likely to add these tools in
the year ahead. —Rebecca Moore
PLAN IN PLACE
Americans say financial plan ensures confidence
mORe than half (58%) of Americans indicate they would feel more confident about
their finances if they had a financial plan in place.
The survey of more than 500 large U.S.
employers representing more than 12 million employees found, as in years past,
plans will continue to add automatic features, in addition to expanding savings
choices and offering employees more
resources to help them meet their needs
while in retirement.
According to a survey released by Certified Financial Planner Board of Standards Inc.,
more than four in five (86%) respondents agree with the statement, “Everyone should
have a financial plan. Even if you have very little money, it is good to know in advance how
you will spend it and the best means of growing what you have.”
Currently, 55% of plan sponsors auto-
matically enroll workers in their employer-
provided defined contribution plan, up
from 24% in 2006.
Seventy-nine percent of respondents claimed to have a financial plan in place;
however, the majority of respondents do not have an official, written document, as 46% said they just have a plan in their head, and 11% have only notes or
ideas written down. Forty-two percent of respondents said they had an official
written plan.
Aon Hewitt found that, of workers who
Trust in financial planners has been shaken due to the recent financial crisis. However,
if given one hour with a financial planner, people would take advantage of it, to focus on
retirement and budget planning. Thirty-six percent of Americans reported working with
a financial planner or adviser. —Tara Cantore
