Executives: Top Priority is to Reduce Pension Cost Growth

April 12, 2005 (PLANSPONSOR.com) - Sixty-five percent of executives polled in a new survey indicate that their top priority over the next two years will be to identify ways to control growth in retirement costs.

According to a Hewitt Associates survey, 49% of 200 financial executives polled say they will focus on reducing pension cost volatility as a way to manage growing costs, while 59% say that they plan to increase education efforts regarding the need to save for retirement. Thirty percent indicated that they would take initiatives to better manage their retirement plans on a global scale, according to a press release from Hewitt.

Executives are not confident that their employees will be able to retire with sufficient assets, however. According to the survey, only 30% believe that their workers will have enough assets for retirement. The executives also seem to pin much of the responsibility for this occurring on themselves, with 70% claiming that whether this happens depends largely on their organization’s ability to manage its workforce.

How do they plan to shrink the gap between problem and solution? Almost 60% plan to increase employee education regarding the need to save for retirement, while 57% say they will increase education on topics such as asset allocation and diversifying assets. Forty-nine percent state that they will attempt to lower the amount of fees paid by 401(k) participants.

Although fewer and fewer companies offer defined benefit retirement plans, 60% who still do say they do not expect to change such plans in the near future. Sixteen percent, however, say that they have planned to close such plans to new employees.

Also of concern is retiree medical benefits. Of those offering such perks to employees, 70% say that they plan to increase cost sharing with future and current retirees.