Employers are refocusing employee retirement benefits, turning to more cost-saving strategies. A new survey by Hewitt Associates shows employers are looking to automatic rebalancing and target-date funds.
Of the 150 mid- to large-size employers surveyed, half currently offer automatic enrollment, up from 44 percent last year. However, of those who are offering it, only 25 percent say they’re somewhat or very likely to add it for new hires, and only 15 percent are likely to adopt it for existing employees in 2009. The reason falls on the cost of increased employer match. Hewitt says some employers may opt for simply eliminating the company match.
Still, few employers (2 percent) have actually cut or suspended their 401(k) company match, and 5 percent are expected to do so over the next year.
Nevertheless, according to Hewitt, employers are keeping their workers’ retirement security in mind. Companies have in turn examined lower-cost tools designed to help employees make better investment decisions. more than three-quarters (77 percent) of employers now offer target-date funds–up from 66 percent last year–and among those that do not currently offer them, more than half (53 percent) plan to add the funds in 2009. In addition, about half (49 percent) of companies offer automatic rebalancing–a tool that helps employees regularly balance their portfolios with their target allocations–and another 20 percent are likely to add the feature in 2009.