US - Employers confidence in their workers ability to save for retirement has plummeted to half what it was in 2005, resulting in a quarter of employers considering automatically enrolling staff into 401(k) schemes in a bid to encourage workers to save, according to research by Hewitt Associates.
The survey, New Employer Trends Over Time, which surveyed 220 of the largest US firms also revealed around 33 (15%) are considering closing participation to any kind of pension plan to new employees.
Confidence in employees taking responsibility for their pension has halved in a year, from 12% to just 6% justifying why 15% of the companies were “very likely” to automatically enrol staff in their 401(k) plans by the end of 2006.
The survey also noted that 6% of firms said it is possible they will freeze accruals, and 5% are very likely to change the design of their pension plan.
Workers inactivity in saving for retirement has also led an increasing number of companies to implement automated features into their schemes.
Director of participant research, Lori Lucas, said:“Automated features change the equation so that inertia around retirement saving and investing works in the employees’ favour: the employee can do nothing and it is ok as the 401(k) plan is on auto pilot.”
A massive majority of companies also said they intend to focuson developing employees understanding of how their 401(k) plan works.
Other key findings revealed the unpopularity of the Roth 401(k), with only 13% of companies offering the service in 2006. Administrative complexity and vague guidelines are two of many reasons cited for not offering a Roth 401(k).
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