Employers Ramping Up Retirement Plan Features, Advisory Services
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.
Source: Aon Hewitt news release, October 30, 2013.
