A MetLife news release says company scores ranged from 19 to 89 and that firms that offered broad defined benefit and defined contribution access outpaced their peers with a showing of 74. These peers are sponsors at companies that only offer a DC plan or incidental access to a DB plan as well as a DC plan.
The news release indicated that a third of plan sponsors say their company’s philosophy is to help employees create future retirement income, while two-thirds agree that retirement income is an important goal, but many say they continue to struggle to translate that belief into action.
“Although most of the burden for retirement security has shifted to employees, plan sponsors still play a critical role,” said Robin Lenna, executive vice president, Corporate Benefit Funding, MetLife, in the news release. “Plan sponsors have more work to do. Most plan sponsors continue to skew their goals, plan design, communications and decision support tools toward savings, which unfortunately favors accumulation over income.”
While 45% of sponsors describe their corporate philosophy regarding the provision of retirement benefits based on a desire to “be successful in a competitive workforce environment and focus primarily on providing them in the most cost‐efficient manner possible,” 35% of the plan sponsors surveyed describe their retirement benefits philosophy as “to support employees’ efforts to create retirement income for the future when taken together with Social Security and their personal savings.”
This is well ahead of the 20% who describe their philosophy as “our business needs are served by proactively creating a program that offers the best financial and other resources to support our employees’ needs to determine and achieve their retirement savings goals.”
Ninety-three percent of plan sponsors report that retirement savings is extremely or very important objective of their retirement plans, but only 65% say retirement income has a comparable level of importance.
Few Plans Set Plan Income Replacement Goals
The research found that 82% of plan sponsors do not set income replacement goals for their qualified plans. Of the few that do, the median replacement goal set is 62%, well below the recommendations of most experts. Likewise, fewer than half of plan sponsors have written policy statements that deal with more than just investment issues (44%), and less than one‐third of them address retirement income in these statements.
Mathew Greenwald & Associates and Asset International conducted the online survey of Fortune 1000 companies on behalf of MetLife. To be eligible for the study, participants needed to work for a Fortune 1000 company that offers at least one DC or DB plan (including cash balance/hybrid plans). Participants also had to have at least a moderate amount of influence over decisions regarding their company’s retirement benefits policy and plan design. Of those surveyed, 81% reported they are very knowledgeable about the retirement plan(s) their company offers. A total of 127 surveys were completed between September 29 and November 8, 2010.
The research report is here.