Only 6% of the respondents to Hewitt’s survey said they are confident their employees will take accountability for their own retirement future this year, down from 12% in 2005, according to the press release on the study. As a result companies plan to add automated features to their retirement plans such as auto enrollment, automatic contribution increases, and automatic portfolio rebalancing.
Hewitt’s survey revealed that 23% of companies are very likely to add automatic enrollment features in their 401(k) plans by the end of the year, 13% are very likely to add contribution escalation features, and 20% plan to add automatic rebalancing of 401(k) accounts.
“Companies that have already implemented automatic features to their 401(k) plans have seen significant results in helping employees save and invest better for retirement,” said Lori Lucas, director of participant research at Hewitt Associates, in the release.
In addition to automating 401(k) plan features, many companies will continue with efforts to educate workers on the value of saving in their plan. Ninety-six percent of respondents say they are somewhat or very likely to focus on making sure their employees understand how their 401(k) plan works and the value of it.
Additionally, 64% say they are somewhat or very likely to encourage long-term saving by educating workers on the advantages of preserving their retirement wealth when leaving the company, and 16% of companies say they are very likely to add online third-party investment advisory services to employees.
While focusing on their 401(k) plans, some employers plan to reduce defined benefit pension plan benefits. Fifteen percent of respondents say they are very likely to close participation to new employees, six percent say they are very likely to freeze accruals, and five percent are very likely to change the design of their pension plan.
Other key findings of the survey include:
- Only 13% of companies say they are very likely to add a Roth 401(k) in 2006. Reasons cited by employers for not offering a Roth 401(k) this year included administrative complexity, vague guidelines, concerns about lack of use by employees, and difficulties communicating the Roth 401(k).
- 6% of companies say they are very likely to add annuities as a form of payment option in 2006.
- 16% of companies offering company stock will either limit employees’ investment in company stock or eliminate it as an investment option in 2006.
- Consistent with last year, the majority of companies (79%) say they plan to make no changes to their company match. Eight percent say they plan to add/increase the company match, and only 1% say they plan to reduce or eliminate the company match.
Hewitt surveyed more than 220 large US companies for the study.