Numerous studies have indicated that Americans need to save more for retirement, and with defined contribution (DC) plans replacing pensions in most workplaces, the onus is now on employees to take control of their financial future. So how can employers ensure their workers are making the most of their retirement savings programs?
A recent study by the Principal Financial Group found that several key features can boost retirement plan participation and savings rates whether all are offered or a combination of just two are available. Those four features include: automatic enrollment, automatic increases, online deferral changes and employer contribution.
After reviewing more than 25,000 retirement plans, Principal noted that when at least two of those features can be accessed in any combination, the average total participant savings rate stands at 11 percent, which is more than double the national average.
If all four options are offered, participation rates rise a whopping 70 percent, going from 47 percent when none of those features are extended to workers to 79 percent when all are available.