A recently released employee benefits survey found traditional 401k plans remain the most popular employer-sponsored retirement plan, offered by two-thirds of responding organizations, well ahead of Roth 401ks and traditional pension plans.
XpertHR’s 2020 Employee Benefits Survey focused on paid leave policies and health insurance in addition to retirement benefits.
Among the survey’s 457 responding organizations, 66% said they offer a traditional 401k plan to all or most of their workforce, compared with 38% for Roth 401k plans and 11% for traditional defined benefit pension plans.
Drilling down further, 4% said they offer defined benefit cash balance pension plans, 4% for employee stock ownership plans (ESOPs), 2% for savings incentive match plan for employees (SIMPLE) IRA plans, 1% for simplified employeepension (SEP) plans, and 5% for some sort of “other” retirement plan.
The survey found just under one in 10 (9%) organizations do not offer any retirement benefits.
“Clearly, modern retirement options focus on savings and investment outcomes, as pensions are a shadow of their former selves,” says Andrew Hellwege, Surveys Editor, XpertHR. “But with two major economic downturns in roughly a 10-year period, employers may want to consider bolstering the financial security of their retirement plans—perhaps by offering increased employer contributions—to help shield workers’ retirement savings from market volatility.”
The survey also covered 403(b) plans and 457 plans, which are provided by 11% and 10% of all responding organizations, respectively. However, these plans are limited to certain organizations and industry sectors.
Industries favoring traditional, Roth 401ks
The survey’s most popular retirement plan overall—the traditional 401k—varies notably by industry classification. While 81% of manufacturing organizations and 78% of services firms offer this type of retirement plan, only about two in five (42%) non-business organizations offer traditional 401ks.
This difference is likely due to the fact that certain organizations in the non-business sector, such as public schools, certain tax-exempt organizations, and state and local governments have other options available specific to them such as 403(b) plans and 457 plans. Indeed, one-third of non-business organizations offer 403(b) plans and 25% offer 457 plans.
Roth 401k plans are most popular in the manufacturing sector, as 59% of these companies offer this type of plan, compared with 41% of services firms, and 23% of non-business organizations.
The traditional defined benefit pension—while largely a holdover from the 20th century—still maintains a presence in the modern workplace. While just 11% of all responding organizations have a traditional pension plan, 31% of companies with at least some union-represented employees offer this benefit to all or most of their workforce.
In fact, among only union organizations, 42% of non-business organizations, 21% of services firms, and 14% of manufacturers offer traditional pension plans.
EAPs and student debt
In addition, the survey report covers over a dozen miscellaneous benefits aside from the main pillars of leave, health care, and retirement. Among these other benefits, employee assistance programs (EAPs) are the most popular, as they are offered by 65% of organizations. Financial wellness programs would fall under the EAP umbrella.
Notably, while 41% of organizations provide some form of tuition reimbursement or assistance, only 3% provide student loan repayment.
“While student loan repayment has been a hot topic in the benefits world for the past few years,” Hellwege says, “employers are clearly not yet sold on the idea, and continue to prefer to provide assistance for education sought during employment, rather than for debt incurred before the new hire walked through the door.”
XpertHR’s 2020 Survey on Employee Benefits was fielded from March 31-April 24, 2020. The survey includes the responses from 457 U.S. employers of various industries and workforce sizes. The total estimated number of employees of responding organizations is 831,319.
SEE ALSO:
- 5 Key Insights from PwC’s Latest Employee Financial Wellness Survey
- Employees Now Most Concerned About Financial Health, Study Finds
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
