Large employers have begun to freeze their traditional pension plans and to automate 401(k) features to push employees to save for retirement, according to USA Today.

In 2005, 67% of large employers offered pension plans, as opposed to 91% 20 years earlier, as per Hewitt Associates.

More than 33% of large employers state that they are likely to begin automatically enrolling employees in 401(k)s and to raise contributions in 2006, according to Hewitt.

"We're seeing a commitment by plan sponsors to get people into the plan," says Lori Lucas of Hewitt.

As employers do away with pension benefits, the companies' 401(k) contributions may rise, and therefore "attract, retain and motivate employees," said David Wray of the Profit Sharing and 401(k) Council of America.

However, almost one third of large employers that were surveyed by Hewitt say that they will probably block new employees from their pension plan and 6% may even freeze pension benefits for 2006.

Employers believe that automating 401(k)s is the best way to get workers to participate in 401(k) programs, as one third of eligible workers do not participate.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

 

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