It’s no secret that the rising costs of retirement finance call for individuals to save more during their working life, namely by participating more actively in the retirement programs offered by their employers. But even if working folks are doing what’s right, how tuned in are their employers in helping them get to where they need to be?
Not very much at all, according to a survey conducted recently by Hewitt Associates, a global human resources services firm. Indeed, of the more than 100 large, U.S. and European multinational organizations Hewitt selected for its Global Retirement Benefits Research Survey, only a paltry 4% said that enabling employees to retire is a top priority. For most companies, particularly those in North America, adequate planning for retirement benefits appeared to be a low priority, and less than half of the corporations surveyed ranked themselves “in control” of the measures required for proper retirement planning, which include aligning retirement costs with business strategies, managing those costs and associated risks, optimizing processes, enabling employees to participate in the programs companies offer and executing a global retirement strategy.
“I am struck by the evident lack of control reported by many global companies that participated in this survey,” Michael Downing, retirement and financial management consultant for Hewitt said in a statement following the release of the survey. “It’s been several years now that companies’ retirement plans have suffered from some of the worst financial market conditions in our history and, more recently, been impacted by corporate scandals and bankruptcies. Companies need to be farther ahead in managing this volatile aspect of their business… It stands to reason that employers who take proactive steps to increase control will achieve better results.”
The survey has hit home with many companies and plan sponsors, says Lori Lucas, director of participant research at Hewitt, and its results are sure to get the ball rolling at many enterprises that have not begun to formulate a workable and reliable retirement program.
But even if many companies, particularly in the U.S., do need to get their act together on the retirement planning front, Lucas believes that individuals also need to be more aware of the increasing costs of retirement finance, and have a more “realistic” expectation of what their retirement savings need to look like. Many people, for instance, have still not factored in the heavy costs of healthcare in retirement, Lucas says, even as plan sponsors are constantly grappling with ways that would allow people to meet these.
“Individuals themselves need to be more tuned in, they need to know that they are going to need 100% of their income in their retirement if they are to meet the costs,” she says.
If any progress is to be made in terms of companies equipping themselves better for their future retirees, then individuals and plan sponsors need to work in tandem. The onus of successful retirement planning has shifted onto the individual, but it is up to plan sponsors to communicate with people, provide them with the know-how on how to take advantage of the programs offered by their employers.