Employers Ramping Up Retirement Plan Features, Advisory Services
Employers are taking action to boost their retirement plan programs. Find out what actions are the most prevalent.
Employers are enhancing their retirement plans and increasing access to professional investment advice in an attempt to bolster employee retirement readiness.
A new study by Aon Hewitt, which polled more than 400 plan sponsors serving 10 million plan participants, revealed a number of initiatives being taken to strengthen employee ability to achieve greater financial security in retirement. Key actions include the following:
•Boosting employer matching funds: The percentage of employers offering dollar-for-dollar matches on the first 6% of employee contributions has nearly doubled in the past two years, from 10% in 2011 to 19% today. And virtually all employers now offer some level of matching contributions.
•Offering immediate eligibility: Three out of four employers now allow employees to begin participating in a workplace retirement plan as of their hire date -- a dramatic increase over the 45% of employers that offered immediate plan eligibility in 2001. In addition, more than half of employers also offer "day one" access to employer matching contributions.
•Providing access to Roth-style plans: Giving plan participants the option of choosing between a standard defined contribution plan and a Roth-style plan has become a priority for more employers in the past several years. Now 50% of employers allow Roth contributions (up 11% since 2008), and of those who offer the Roth option, 27% currently allow in-plan Roth conversions. Another 16% will offer this feature within the year.
•Offering access to a range of advisory services: One of the fastest-growing benefit trends is the availability of various types of professional guidance, which is now offered by three out of four plan sponsors. One-on-one financial counseling tops the list (with 59% of plans offering), followed by online guidance (55% of plans), and managed accounts (52% -- a significant jump from just two years ago when only 29% of plans offered this feature). Target-date funds -- another form of investment guidance -- are well into the acceptance curve, with 86% of plan sponsors offering them.
1. Aon Hewitt news release, October 30, 2013.
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