Seventy-one percent of employees surveyed by State Street Global Advisors (SSgA) indicated that automatic deferral increases of 1% each year would help them save more. Seventy-four percent want employers to provide them with clear examples of how what they save today will pay off in the future.
“In many cases employees think it’s a joint responsibility between them and plan sponsors to get them to adequate retirement savings,” Frederik Axsater, global head of defined contribution (DC) at SSgA, told PLANSPONSOR. He pointed out that 30% of survey respondents feel determining how much to save is a shared responsibility with their employer, including 37% of those ages 18 to 25.
In addition, 42% feel the decision of what investments are appropriate for retirement investing is either a shared responsibility with their employer or completely their employers’ responsibility. Thirty-two percent indicated the monitoring of their retirement needs is a shared responsibility with their employer or completely their employers’ responsibility, including 45% of employees ages 18 to 25 and 39% of those ages 26 to 35.
“Having an understanding of employees’ mindsets and priorities is the core of this business,” Axsater said. “One of key findings [of the study] is participants have high aspirations; they want to thrive, not just survive, in retirement.” He noted that the top three things employees are looking for from employers are guidelines for how to invest, ideas about how to save and information about how to reduce spending.
Axsater added that it is important for employers to make things easier for employees when they enter and exit plans. Only 45% said enrollment forms were well-designed and easy to read, and just 32% said guidance from human resources was helpful. Only 44% found it easy to transition savings when they changed jobs.
He noted that younger participant segments have unique attributes; among the younger cohort, 27% cashed out their retirement savings when they changed employers—more than twice the percentage of the general population. Very clear stats and worksheets about the effect of cashing out is particularly important for younger workers; employers need to show them other options when exiting the plan, including the power of compounding, Axsater said.
About one-third of survey respondents suggested they were 10 years or less away from retirement, and these employees also want guidance. More than half said their employers should engage with them more frequently as they approach retirement by sponsoring seminars, newsletters and webinars that focus on investing strategies for near-retirees.
According to Axsater, 48% of survey respondents approaching retirement want help managing investments, 47% want information about events and circumstances that may affect retirement, and 46% admit they do not understand Social Security. He suggests employers hold seminars to discuss retirement planning and other benefits, such as Social Security and Medicare, and provide worksheets and booklets that are easy to understand.
Plan sponsors can also create a community with social media for those closer to retirement. Axsater said plan sponsors should determine the overall objective and target audience for the campaign and select the type of media that fits with the company, plan and participants (video, Facebook, etc.).
“One key takeaway [from the survey] is plan sponsors are incredibly powerful in helping participants make the right decisions to achieve retirement readiness, and the survey shows participants want sponsors’ help with saving and investing appropriately. Together sponsors and participants can make retirement work,” Axsater concluded.
The DC Investor Insights Survey was conducted by SSgA in collaboration with Boston Research Group in October 2012. In total, 1,396 online survey interviews were conducted among individuals ages 18 to 55 and older who actively participate in their employer-sponsored retirement plan.
The survey report is available at www.ssga.com/dc/theparticipant.