The survey also found 401(k) account balances are at an all-time high, with surveyed plan sponsors reporting average account balances of just above $85,000. However, only 12% of plan sponsors reported that “most employees are or will be financially prepared for retirement.”
The “12th Annual 401(k) Benchmarking Survey,” conducted by Deloitte, the International Foundation of Employee Benefit Plans (IFEBP) and the International Society of Certified Employee Benefit Specialists (ISCEBS), shows a 7% increase in the number of plan sponsors conducting retirement readiness assessments for employees. This is a jump to 32% in 2012 from 25% in 2011.
According to the survey, offering options such as automatic enrollment, Roth 401(k) features and individual financial counseling have had a positive impact on plan participation and awareness. Eighty-six percent of plan sponsors who implemented automatic enrollment have seen a positive impact on plan participation by employees. The Roth 401(k) feature continued to increase in popularity among plan sponsors, with 53% reporting that their plans now offer a Roth feature, representing a 6% jump from 2011. More plan sponsors began offering employees individual financial counseling and advice – up from 50% in 2011 to 61% in 2012 – further underscoring the emphasis plan sponsors are placing on participant education.
“Plan sponsors clearly recognize the importance of saving for retirement and are working hard to provide their employees with the right tools to help them effectively plan for this next life stage,” said Stacy Sandler, principal, Human Capital, Deloitte Consulting LLP. “In fact, we found that nearly nine out of 10 plan sponsors (88%) feel that enhancing their existing participant education strategies is somewhat or very likely to help their employees’ ability to be ready for retirement.”
Scott Cole, senior manager, Human Capital, Deloitte Consulting LLP, added, “Despite the encouraging data regarding the increase in 401(k) balances and educational tools offered, more still needs to be done to help employees adequately prepare for their individual retirement needs. For example, approximately two-thirds of those plan sponsors surveyed believe that less than 10% of their employees take advantage of the educational resources offered. Simplifying retirement education and making it less daunting or intimidating to participants may be the key to improving participation and retirement readiness in the future.”
The survey was conducted electronically and polled 400 respondents, evenly distributed by geography, size and ownership status (i.e., publicly or privately held). A copy of the survey can be downloaded from here.