Employers Making Retirement Readiness A Top Priority
"Employers understand that financial wellness is more than what workers are doing today in terms of savings in their retirement programs—that it's evaluating whether their long-term investment strategies are positioning them to be ready when it comes time to retire, and whether other priorities are getting in the way," said Patti Balthazor Björk, director of
To help workers reach their retirement goals, employers continue to offer and promote the use of investment advisory tools. More than three-quarters (76 percent) currently offer target-date funds as a way to provide workers with a simple and straightforward approach to investing. Of those who do not offer target-date funds, 35 percent will likely add this option in 2013. Managed accounts and online third-party investment advisory services also continue to gain popularity (64 percent), up from just 40 percent in 2012.
"To ensure that a worker's investment risk exposure appropriately matches their needs given their age and other factors, it is critical that 401(k) investors periodically rebalance their portfolios. However, we know that most rarely, if ever, do so because they are overwhelmed or unsure about their investment choices," explained Björk. "Features like target-date funds and managed accounts take some of the guess work out of investing, which can help workers stay on track with their savings goals."
In addition to focusing on financial wellness,
"Retirement income solutions offer employees a way to receive regular, scheduled payments from their DC plan much like what they would have seen from a traditional DB plan. These solutions have become increasingly attractive to workers because they enable them to manage their retirement income in a predictable way once they reach retirement," said Björk. "However, some employers are hesitant to add these features in part because of administrative and fiduciary challenges associated with implementation. Additionally, some companies are waiting to allow the market to mature and products to evolve further."
Other key findings:
- 52 percent of companies will use podcasts and 42 percent will use text messages to communicate and educate their workers on their retirement benefits in 2013.
- The percentage of plan sponsors that plan to use social media channels to communicate with workers has tripled from 6 percent in 2012, to 18 percent in 2013.
- 37 percent of employers have recently reviewed the total DC plan costs (fund, recordkeeping, and trustee fees). Among those who have not, 95 percent are likely to do so in 2013.
- 35 percent of employers completed a review of DC fund operations, including fund expenses and revenue sharing; 87 percent plan to do so this year.
- 31 percent of employers recently changed their DC plan fund lineup to reduce costs. More than half (52 percent) of the remaining companies may do so in 2013.
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