Benefits June 24, 2002

K Plans Most Important Savings Tool

June 24, 2002 (PLANSPONSOR.com) - More than 60% of plan sponsors attending a recent Merrill Lynch Retirement Group conference listed the 401(k) defined contribution plan as the most important employee retirement savings tool.
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While 63.3% backed this view,

  • fewer than 7% said Social Security would be enough, and
  • 5.6% said personal employee savings would be key

Concerns

But 27% of those at conference fretted about their employees’ low savings rate, according to the survey results. To help boost savings, 57.4% of respondents encouraged the use of a company matching contribution.

While the savings rate was the chief concern for most, 

  • 25% of respondents listed program costs as their top issue, and
  • one in five said that providing investment education or advice was uppermost on their mind

Prickly Issues

On the sticky advice issue, four out of 10 said they think such advice is more important to participants than the number of investment options, listed by 28.7% as most important, or the name recognition of the investment provider, noted by 27.6% of the sample.

When asked if they were considering broadening the education and advisory programs they offer:

  • 46% of respondents said they are worried about liability,
  • almost 30% said they would, but did not think employees would be willing to pay, and
  • 23% said they saw no problems in offering advice as long as appropriate disclosures and limitations are provided

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