Although retirement savings plans are often heralded as a means of attracting and retaining employees, when asked to rank the importance of various goals for their savings plans:
- 47% ranked as first allowing employees to accumulate assets sufficient to maintain their standard of living in retirement
- almost 20% ranked attracting new employees at the top
- 20% cited retaining current employees as most important
- 16% said that maximizing their employees’ abilities to save on a tax-deferred basis was of prime importance.
The survey also examined eligibility requirements, finding that:
- almost 70% of the sample have eligibility requirements of three months of service or less
- 37% offering eligibility immediately after hire, provided age requirements have been met
- 43% off all plans have no age requirement
- 19% of plans have immediate eligibility, with no age or service requirements.
Those with eligibility requirements are loosening them. According to the survey, plans easing their requirements over the last three years included:
- over a quarter of smaller plans, with assets of less than $50 million
- 36% of those with assets between $50 million and $100 million
- a third of plans with between $100 million and $250 million in assets
- almost 40% of those with between $250 million and $500 million
- just under half of those between half a billion and a $1 billion in assets
- 43% of those holding more than $1 billion
The most important reason cited for loosening these requirements is to increase participation, followed by the need to attract and retain employees.
While automatic enrollment is often seen as a way of increasing participation, this method is used by:
- only 6% of all surveyed plans
- some 15% of larger plans
Of plans with this feature:
- three-quarters saw an increase in participation
- 63% saw improvements in ADP/ACP test results
- half said it made their employees more aware of retirement planning.
According to Mercer, over the last three years, 15% of the sample has liberalized the vesting requirement for the employer matching contribution – driven primarily by the need to attract and retain qualified employees and the desire to stay competitive.
- 37% of all plans report immediate vesting
- 46% have graded vesting
- the remainder have cliff vesting.
The sample comprised responses from 252 organizations. The assets of the surveyed plans totaled $125 billion and the average number of eligible employees per plan surveyed was 8,100.
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