Three-quarters of plan sponsors say helping their employees save enough for retirement is one of the top three most important factors in their retirement benefit strategy. And nearly 4 in 10 say it is the top factor, according to a new LIMRA Secure Retirement Institute study.
“With more and more employees relying primarily on their defined contribution plan to save for retirement, plan sponsors are recognizing that their decisions can influence their employees’ savings habits and ultimately, their retirement readiness,” said Kathleen Rook, assistant research director, LIMRA Secure Retirement Institute. “However, plan sponsors have to balance their desire to help employees save adequately for retirement with concerns of managing costs, plan administration, and adhering to increasing regulatory requirements.”
The survey also asked plan sponsors to grade their retirement plans and their employees’ retirement savings habits. Most employers gave their own retirement plans a higher grade than their employees’ savings habits (chart). More than three fourths of the plan sponsors give their company’s plan a grade of A or B, but only 61 percent give their employees’ saving habits similar grades.
“These findings suggest that while employers want to help their employees save for retirement, they do not feel their actions or plan design is responsible for their employees’ retirement savings habits,” commented Rook. “Research shows that tools like auto-enrollment and auto-escalation can have a measurable impact on employee participation and savings rates, yet only a third of plan sponsors offer these features in their plans1.
These findings indicate opportunities for plan providers and advisors to help employers manage costs and leverage tools to help employee savings habits,” Rook adds.
LIMRA Secure Retirement Institute surveyed more than 1,500 plan sponsors in late 2013 and early 2014 to get a better understanding of their perceptions and expectations around their retirement benefits programs.
1How America Saves 2014, Vanguard