Survey: 401(k) plan designs help employees meet retirement income needs
Employers continue to design their 401(k) plans in a way that encourages positive saving and investing behaviors and helps employees meet their increasing retirement income needs, according to a survey by Hewitt Associates, a global human resources consulting and outsourcing services company. These efforts include significant increases in the adoption of automated features and target date funds, better investment education tools and an increased focus on lowering plan expenses.
Hewitt's biennial survey of more than 300 mid- to large-sized companies found that the percentage of employers automatically enrolling employees into the 401(k) plan has almost doubled in just two years, from 34 percent in 2007 to 58 percent in 2009. Of those plans using automatic enrollment, 69 percent now default workers into a target date fund, up from 50 percent in 2007. Hewitt's survey also showed a steady increase in the number of employers defaulting employees into contribution rates at three percent or higher, from 83 percent in 2007 to 89 percent in 2009.
Along with implementing automating features in plans, more companies are offering funds and advice tools that simplify investment decisions and help employees make wise choices.
Nearly six out of ten employers (59 percent) ranked investment fees/expense ratio as one the most important factors in selecting investment options for their 401(k) plans. Most plan sponsors proactively disclose administrative fees to participants.
A company match, (most commonly $1.00 per $1.00 of employee contributions up to six percent of pay - 65 percent), is offered by almost all companies (93 percent).
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