The International Foundation of Employee Benefit Plans (IFEBP) released survey results in September 2010 that found many U.S. companies are hanging onto their employee retirement plans. At the same time, companies are implementing additional features aimed at helping employees save.
“The lingering effects of the recession have prompted workers to closely examine their retirement saving and investment strategies for the future,” said Julie Stich, Senior Information/Research Specialist at the IFEBP. “For many, employer-provided retirement plans will be a significant component of their retirement income. The survey found that most employers are committed to offering some sort of retirement vehicle, but the type of plan varies greatly by organization type.”
The survey examined four types of organizations – corporations, professional service firms, public employers and multiemployer plans. Many are adding automatic enrollment and retirement counseling, both of which may contribute to retirement security for employees.
Defined benefit plans continue to be most popular with public employers and multiemployer plans. Eighty-eight percent of these organizations sponsor a defined benefit plan, while 41% of corporations and 19% of professional services firms do. The economy has caused some employers to freeze or terminate their defined benefit plans, but 79% of respondents said they have not done so. Just 3% of respondents said they had terminated their plan. “While traditional pension plans are less prevalent than in the past, many employers offer a 401(k) or other type of defined contribution plan to ensure that employees will save for retirement,” said Stich.
Eighty-three percent of corporations offer a 401(k) plan, as do 77% of professional service firms. 401(k)s are also popular with public employers, 61% of which sponsor a plan, and multiemployer plans (58%). The survey found that 72% of employers use automatic features to encourage employees to save in their 401(k) plan. Of these employers, 71% provide a target date investment fund as the automatic investment option. Fifty-one percent of the sponsors with automatic features have automatic enrollment.
“Employees may be unaware of the importance of saving for retirement at an early age or don’t consider saving a priority when paychecks are stretched thin,” said Stich. “Automatic enrollment provides the first step toward building a retirement income and few employees opt out of plan participation once they’re enrolled.”
Financial or retirement planning opportunities are another popular way employers are helping employees plan ahead. Forty-four percent of employers offer some kind of financial planning help, and 81% said they offer employee assistance plans that can help workers suffering stress due to current financial issues.