According to a survey of 255 companies by Buck Consultants, also ranking at the top of employers’ list of concerns was encouraging employees to take responsibility for their retirement savings (96%); making retirement benefits competitive (88%); and meeting their desired retirement cost level (56%).
Respondents said that many plan participants either lack the tools needed to plan for a secure retirement or don’t take advantage of the tools available to them, and therefore nearly two-thirds of employers will make major changes to their plan design and communications by 2008 to try to get workers more engaged in retirement savings, according to the survey results.
The provisions of the Pension Protection Act that employers say have the greatest impact on their defined contribution plans are the removal of the sunset provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (45.9%); investment advice allowance (41.2%); and automatic enrollment (40.7%).
About a quarter (26%) of respondents currently incorporate an automatic enrollment provision into some or all of their retirement programs, and half of those that don’t use auto enrollment are considering doing so within in the next two years.
According to the survey, only 28% of companies actually monitor employee savings and investment patterns to determine if they are investing in a way that facilitates retirement adequacy.Similar trends are seen with regard to offering investment advice to plan participants, with 29% currently offering the feature and 57% of those who do not are looking at doing so in the near future.
The survey also found that Lifecycle funds were the most popular features in defined contribution plans (55%), followed by Indexed Options Beyond S&P 500 fund (47.1%), investment advice (42.3%) and employer securities (36.6%).
The survey is available for $250 from Buck’s Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533, or call 1.800.887.0509.