Employers are paying closer attention to the offerings in their 401(k) plans, with an eye toward helping workers better prepare for retirement, according to a report from Deloitte Consulting, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists.
Likewise, while fewer workers believe they will succeed in preparing for retirement, they are continuing to invest in their 401(k).
"While today's economic conditions have dramatically changed the retirement savings landscape, 401(k) plans are bent, not broken," said Mark Dzierzak, a specialist leader with Deloitte and director of the survey. "Plan sponsors continue to support their plans and will maintain a close watch on their role as a strategic tool in their overall benefits program."
Sixty-three percent of workers said they are taking a "wait-and-see" approach to their retirement savings. Seventeen percent of employers said they have seen deferral rate changes, hardship withdrawals and loans increase.
Thirty-eight percent said their employees have decreased their savings rate; 60% have held steady. Twelve percent said they have seen an increase in automatic enrollment opt-outs.
Sixty-three percent of employers said they need to take an interest in their employees' retirement readiness, and 14% said they feel "very" responsible about this. Nineteen percent of employers said that "very few" of their employees will be financially prepared for retirement.
Most employers do not think their workers know how to save, with 84% saying their employees are confused about selecting fund options, and 53% saying their employees do not know how much they will need for retirement.
Employers are now thinking about taking brand-new approaches to their 401(k) plans, with 37% considering generational segmentation to plan design, and another 37% considering conducting a retirement readiness assessment.
Twenty percent have re-enrolled participants, and another 60% are thinking about it. Forty-two percent of employers automatically step up participants' contribution rates, up from 35% that did so last year. Fifty-seven percent of employers said their employees are immediately eligible for matching contributions, up from 48% last year.
"Because 401(k) plans represent a primary savings vehicle for employers and employees, the economic downturn has created a source of anxiety for both employers and employees alike," explained Tim Phoenix, a principal with Deloitte.
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