US - Auto-enrolment in 401(k) plans and other high-cost retirement benefits have been hit by the global downturn, research by Hewitt Associates reveals.
Last year, some 57% of companies without auto-enrolment said they were likely to roll out the provision for new hires and 27% said they were likely to extend the practice to existing workers. This year the number of companies looking at introducing auto-enrolment fell to 25% for new hires and 15% for existing staff.
Commonly cited reasons included the increased cost of the employer matched contributions (55% of employers), up from nearly 10% last year.
Hewitt director of retirement research Pamela Hess, explained: "The continued bleak economic outlook is forcing many companies to make difficult decisions with respect to their retirement benefits. The reality is that automatic enrolment and matching employer contributions can be two of the costliest discretionary expenditures companies incur in a given year."
Hewitt found many employers had also turned to less costly retirement options in the face of the recession to reduce their benefits spend, with 77% of companies surveyed offering target date funds, a rise from 66% last year, with more than half (53%) also planning to introduce such options in 2009.
Hess added: "In an effort to avoid taking more drastic measures - such as cutting jobs or salaries - employers are opting not to add new features and/or they are temporarily suspending these initiatives in order to stay solvent in the flagging economy."
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