Employers are committed to providing 401(k)s to their workers, a survey from the human resources group WorldatWork, conducted with the American Benefits Institute, found.
It found 94% of respondents offered a 401(k) plan to their employees and 92% offered a matching contribution.
The American Benefits Institute is a research and education affiliate of the American Benefits Council. WorldatWork and ABI polled 476 member companies for the survey.
The report noted that the high number of companies that offer a plan may be due to the high number of member companies that have more than 1,000 employees (71%). It may also be a result of how data was gathered: the survey sent to respondents was titled “Trends in 401(k) Plans,” possibly indicating to some would-be respondents that they shouldn’t respond if their firm doesn’t offer a plan.
Still, the survey found participation rates were high, as 73% of companies reported at least 70% of their work force participated in the plan. Furthermore, 77% of respondents said their workers were contributing at least 5% of their salary from each paycheck, and two-thirds said more than half of their work force is taking advantage of the full employer match. More than half of respondents said their workers were unlikely to contribute the maximum level to their retirement plan, though.
“Because 401(k) plans have become such a vital component of employees’ financial security, it is essential that we strengthen the system by building on those successes,” Lynn Dudley, American Benefits Council senior vice president, retirement and international benefits policy, said in a statement.
Over three-quarters of firms have made no changes to their company match in the last 12 months and have no plans to change them in the near future, the report found. In fact, when asked specifically about cuts to the company match during the recession, 88% of respondents said they neither suspended nor eliminated their match in the last five years.
“Employers continue to believe in the 401(k) system,” Dudley added. “If lawmakers avoid destabilizing tax changes, enhance automatic contribution programs and expand participant education through electronic delivery, 401(k) plans will continue to serve retirees of all income levels.”
Regarding fee disclosure, most respondents agreed new rules haven’t changed how clear plan disclosure documents are to participants, and only 20% said they made them clearer. Twenty-two percent said they actually made disclosure documents less clear.
More than half of respondents say their workers can choose from at least 16 investment options in their plan, and most offer more than 10. Unsurprisingly, target-date funds were the most popular choice among employees, chosen by 68% of participants.
The report also found that employers recognize that their employees sometimes struggle with financial decisions. Twenty percent of respondents said they offered cash and debt management education to their employees.
The report found 56% of respondents used automatic enrollment in their plan, and more than a quarter of all respondents offer it in conjunction with automatic escalation. Those who don’t use automatic escalation have higher default contributions in their auto-enrollment scheme than those that do, with 42% saying the default participants are in the plan at a rate higher than 4%.
“Employers’ continued investment in 401(k) plans seen though sustained contribution levels, enhanced plan choices and increased usage of automatic enrollment features is further evidence that employers view 401(k) plans as a fundamental part of an employee’s total rewards package,” Cara Woodson Welch, WorldatWork vice president of policy and public affairs, said in a statement. She urged policymakers to “take note of the high utilization of these plans” and refrain from making changes to how they are administered.