Participants in employer-sponsored retirement plans are hungry for investment guidance and willing to use automatic enrollment features to achieve their retirement goals, according to results of a survey of changing attitudes toward retirement readiness released last week by State Street Global Advisors (SSgA), the asset management arm of the State Street Corporation.

Executives from the Boston-based company held a press briefing in New York to announce the findings of the Defined Contribution Investor Survey--conducted jointly with the Boston Research Group--of more than 1,000 participants in 401(k), 403(b), profit sharing and stock purchase plans.

"Plan participants communicated loud and clear about what they need: simple steps and automated features," said Kristi Mitchem, senior managing director and head of Global Defined Contribution for SSgA. "One of the most surprising and encouraging findings is the willingness of participants to take 401(k) direction from their employers.

"The ongoing volatility in the financial markets has increased anxiety among plan participants," Mitchem said, "and a significant percentage want simplified and prescriptive guidance in order to make progress toward their goals."

Figures from the McKinsey Retirement Practice estimate that for the first time in 2012, defined contribution (DC) assets will outnumber traditional defined benefit (DB) assets with DC assets rising to 52% of all retirement assets held globally.

The study focused on four areas for employers and their participants: attitudes toward saving for retirement; awareness of automatic features in DC plans; awareness of long-term investment risks and differences among age groups that impact their likeliness to save.

Attitudes towards saving have changed to the point that 75% of survey respondents indicated that they would be willing to be automatically enrolled in a 10% savings "boot camp" for six months. The survey also found that 54% of participants were "very" or "somewhat confident" that their savings are on track to fund their planned retirement lifestyle.

Other participants had a less optimistic outlook. Most blamed themselves for being off-track, with 55% indicating they lack confidence because their rate of savings is not high enough and 52% saying they did not start saving early enough. Although 74% of respondents indicated that "making me automatically do something like save more or invest in a professionally managed fund" would improve their retirement readiness, they did not quite understand the automatic enrollment and auto-escalation features some employers offer. They also showed limited awareness of long-term investment risks such as the risk associated with inflation and risk related to ownership of company stock. Forty-three percent of respondents that are aware of the U.S. inflation rate have considered its effects on their retirement, but don't know what to do about it.

Also participating in the press briefing were Brigitte Madrian, Aetna Professor of Public Policy and Corporate Management at Harvard University's Kennedy School of Government, and Dallas Salisbury, president and CEO, Employee Benefit Research Institute. Salisbury noted that retirement plan models are being developed that would automatically enroll, escalate, diversify and-at retirement-distribute employee savings.

Madrian discussed areas where DC plans currently fall short. Some employers don't offer them, she pointed out, while some sponsors offer less than average matches. On the employee side, some workers don't participate even when they are offered the opportunity; others don't save enough.

Madrian spent time on the subject of "leakage," which occurs when employees take money out of their plans before retirement. Leakage related to job changes represents about 3% of total assets. While loans are usually repaid, the fact that we live in a high (job) turnover society means "The 3% being taken out in leakage is a non-trivial impact that deserves more attention than it gets," Madrian said.

The survey also examined the impact of generational differences and economic crises on respondents' attitudes towards saving. Some 73% of the youngest workers, ages 18 to 24, said the recent volatility prompted them to save more, as opposed to 37% of the general population. "The market volatility has created a new generation of savers," Mitchem said. "Younger workers are saving more and spending less than their parents, while 66% of those over 50 years of age admit to not saving at an early enough age."

SSgA has embedded the survey results into a bi-annual magazine for plan sponsors called "The Participant." According to Mitchem, it is designed to help sponsors "deliver solutions that combat barriers to retirement readiness and make a difference by understanding employee needs and providing simple steps and tools that participants can use to increase savings and address investment risks, like inflation and company stock."

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