Administration May 3, 2004

Survey: Participants Trust Employers for Retirement Savings Info

March 17, 2003 (PLANSPONSOR.com) - Participants in workplace retirement plans trust their employers to provide them with a variety of investment education and advice tools to have a better chance of achieving financial security later in life.
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Of the participants looking to their company’s executive suite for investment help during a time of economic undertainty, bear markets, and pending war, according to a new CIGNA poll:

  • 75% trust their employer to provide them customized retirement planning and education
  • 71% trust their company to provide them specific advice and information on making investment choices, such as choosing mutual funds and stocks
  • 71% trust their employer to provide information about managing their stock purchase plan or stock options.

But, those participants said their employer isn’t now doing a very good job of providing reliable help with four out of 10 awarding their company a “C” or lower for their efforts:

  • a mere 36% of survey respondents said they regularly receive retirement planning communication from their employer
  • 33% said they get retirement information from their employers “once in a blue moon”
  • 15% said they receive such information only when they ask for it
  • Another 5% reported that they hear about retirement planning in the office only during the annual open enrollment period.

The apparent bond of trust between participant and employer was also apparent when the employees were asked whom they would trust to manage the new savings vehicles proposed by the US Treasury (the Lifetime Savings Account/LSA, the Retirement Savings Account/RSA and the Employer Retirement Savings Account/ERSA) (See  ERSAs Bear Major Changes for Plan Sponsors. ):

  • 76% of respondents say they trust their employers to manage such accounts for them
  • 74% favor personal brokers
  • 72% lean toward private investment firms or mutual fund companies
  • 45% contend that Uncle Sam could do the job.

The new proposed retirement plans are capturing greater attention and interest from solid majorities of workplace investors, according to the survey:

  • 77% have heard or read about the RSA,and 67% say they are at least somewhat interested in participating
  • 71% have heard or read about the LSA, and 69% say they are at least somewhat interested in getting involved
  • 66% have heard or read about the new ERSA, and 57% indicate they are at least somewhat interested in participating.

That’s significantly better than investor commitment to plan enhancements under EGTRRA such as increased contribution limits and catch-up provisions for those over 50, which became effective in January 2002:

  • 61% of all employees say they are aware of the changes
  • 35% say they are taking advantage of them
  • 29% say they’re totally ignoring the new provisions.

The survey covered 750 US employees who participate in workplace-sponsored retirement plans.

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