Increasing life expectancy, rising health care costs, pensions a thing of the past—saving for retirement has never been more critical. Yet many workers (unsurprisingly) still aren’t saving enough.
The good news: employers are taking steps to help them out. A recent survey by Willis Towers Watson found plan sponsors are making enhancements to 401k and similar defined contribution plans.
Study results showed “more employers are adding ‘automatic’ and Roth design features to their 401k plans, boosting employer contributions, streamlining investment choices and improving fee transparency.”
Almost three-quarters of survey respondents reported auto-enrolling new participants, up from 68 percent in 2014. And 60 percent of plan sponsors now provide auto-escalation; only 54 percent reported doing so in 2014.
Additional improvements plan sponsors have reported making:
- 70 percent are offering Roth features, compared to 54 percent in 2014
- 24 percent increased plan contributions over the past five years, whether through employer match (60 percent), encouraging savings and employee engagement (51 percent) or offsetting benefit changes in defined benefit programs (44 percent)
- 42 percent have tightened up their investment options menu, and 41 percent plan to reduce the number of options even more by 2020
- 93 percent are offering target-date funds as the default investment option, up from 86 percent in 2014
- 80 percent now offer health savings accounts, and 12 percent are planning or considering adding them by next year
- 41 percent are charging a fixed-dollar amount per participant for recordkeeping, compared to 32 percent in 2014
- 78 percent expect to increase efforts to educate employees on retirement planning issues
“With most employers now offering a DC plan as the primary retirement savings vehicle, they have become very focused on how to improve their plans and deliver better outcomes to participants,” Tammy Hughes, senior retirement consultant with 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.”
Jessa Claeys is a writer, editor and graphic designer.
