Defined contribution plans are now considered U.S. workers’ primary retirement savings vehicle, but concerns are mounting that workers are not saving enough.
A new survey by Willis Towers Watson, an advisory, broking and solutions company, finds that employers are striving to counter this trend by enhancing their DC plans, for one thing by adding automatic features to their plans.
Seventy-three percent of employers now automatically enroll new participants, compared with 68% in 2014 and 52% in 2009, according to the survey findings.
In addition, 60% of respondents provide auto-escalation features, which can significantly improve an employee’s retirement readiness, up from 54% in 2014.
“Helping employees with their long-term financial security has emerged as a very high priority for employers,” Tammy Hughes, senior retirement consultant at Willis Towers Watson, said in a statement.
“The enhancements they are making should go a long way toward encouraging greater participant savings as well as wiser investment decisions.”
The survey was conducted in November among 349 large and midsize U.S. companies that sponsor a defined contribution retirement plan.
Employers are making other enhancements, according to the survey. Seven in 10 respondents said they offered Roth features within their 401(k) plan, up from 54% in 2014 and 46% in 2012.
A report in October supported this finding. It showed that a growing number of large employer DC plans had added auto-enrollment, auto-escalation of contributions and Roth options as enhancements to their plans.
A quarter of employers in the Willis Towers Watson survey said they had raised their plan contributions over the past five years. Sixty percent of those that chipped in more did so by increasing the employer match, 51% by encouraging employee savings and engagement and 44% by offsetting benefit changes in their defined benefit program.
A recent report said that the funded ratio of the 100 biggest public defined benefit pension plans in the U.S. rose in the fourth quarter.