Despite Pessimistic Outlook, Participants Renewing Retirement Savings Focus

September 29, 2011 ( – Results from the Mercer Workplace Survey show U.S. retirement benefit plan participants are dramatically more pessimistic about their economic expectations than just one year ago. 

The percentage of participants expecting a recession has nearly doubled (42% versus 23% in 2010). Participants have internalized this gloomy economic outlook with a record number of participants fearing job loss (45%, up from 36% in 2010) and planning to delay retirement (44% up from 35% in 2010)..

According to a news release from Mercer, there typically is a direct correlation between economic outlook and retirement behavior. This year, however, despite deep economic concerns, participants seem to be renewing their focus on retirement savings and gaining confidence in their ability to do so. “In 2010, most participants saw the economy improving but not their own personal situation – a highly unusual divergence,” said Suzanne Nolan, Partner and Director of Marketing and Communications for Mercer’s U.S. Outsourcing business, in the news release. “This year’s results reflect a stunning reversal in terms of a highly negative view of the economy but a renewed commitment to and accountability for their own retirement planning.”

Proof of this renewed focus and confidence on retirement savings is reflected in several data points from the Mercer Workplace Survey. For example, over the past year 41% of participants claimed to have increased their 401(k) contribution rate (up from 31%), 40% reallocated existing portfolios (up from 33%), and 38% reallocated their future contributions (up from 29%). In the coming year, participants also plan to contribute more to their 401(k) plans, and a slightly higher percentage expect to contribute the tax-deferred maximum (11%, up from 8% in 2010).

These positive actions mirror a corresponding shift in attitude, with participants becoming more accountable for their key retirement decisions. Eighty-five percent of participants feel confident in their 401(k) asset allocation, 83% in their investment selection, and 77% in their contribution amount. These results are all improvements over 2010 results and top some levels found in pre-recession responses.

“We believe this increase in personal accountability among retirement plan participants is ‘good news’ for plan sponsors and their on-going efforts to increase employee engagement levels,” said Nolan. “Participants seem to be saying that they can no longer rely on market performance, their employer or the government to build their retirement savings for them, but must take control of every aspect they can in order to provide for a successful retirement. Employers and plan sponsors alike should see this as a unique opportunity to offer and promote tools and resources to assist participants in making informed retirement decisions.”

The Mercer Workplace Survey tracks employee attitudes toward, and experiences with, employer-sponsored retirement, health and benefits programs. The survey represents a national cross-section of active 401(k) participants defined as those currently contributing to a 401(k) plan irrespective of balance or having a 401(k) balance of $1,000 or more with their current employer, whether or not they are currently contributing. Online interviews were completed with 1,507 participants between June 16 and July 1, 2011.