NU Online News Service, Aug. 11, 2004, 3:10 p.m. EDT
The Principal Financial Group is offering a way to spur employees to set more money aside for retirement.[@@]
The Principal, Des Moines, Iowa, has introduced a “Step Ahead Retirement Option” feature to its retirement plans to allow participants to increase their contributions automatically each year by a specified percentage. The object of the option is to overcome employee procrastination about increasing the rate of their retirement savings as their pay levels go up, the Principal says.
The company says its research shows that 80% of plan participants don’t save enough to secure an adequate retirement income.
“While automatic savings plans like the 401(k) are one of the most effective ways to get people to start saving for retirement, the bigger challenge is to get them to keep increasing their savings,” says Julie LeClere, director of retirement and investor services for the Principal.
The new option also enables employees to specify the number of years they want their savings to be stepped up, within the maximum allowed by the plan or the IRS. Employers maintain control by selecting the month for the automatic increase that is right for them, the Principal says.