Employers are boosting their efforts to educate and make it easier for employees
to participate in their 401(k) plans in 2005, according to a survey of 200 large
employers by Hewitt Associates.
Almost 90 percent of employers reported that they plan to focus on making sure
their employees understand how their 401(k) plan works, the value of it, and
how to access it.
They also plan to take steps to promote personal responsibility for retirement
planning and initiate actions designed to increase 401(k) plan participation.
Seven out of 10 employers (70 percent) report they will focus on offering additional
support to employees to manage the diversification of their 401(k) plan.
Almost half of companies (47 percent) say they are also likely to automate
certain features in their 401(k) plan as a way to increase participation and
quality of participation. Key areas of focus for those companies include automatic
enrollment, automatic contribution rate increase features, and automatic rebalancing.
"Many employers are acknowledging that regardless of their efforts to
educate workers on the importance of saving for retirement, there will always
be some who are just not going to actively participate on their own," says
Lori Lucas of Hewitt Associates. "Automating the 401(k) plan is a way that
enables such employees to better maximize the value of their plan without requiring
a lot of time or effort on the part of the employee."