ARLINGTON, Va., Feb. 26, 2018 (GLOBE NEWSWIRE) -- With concerns mounting that employees aren’t saving enough for retirement, U.S. employers are making significant enhancements to their defined contribution (DC) plans, now considered the main retirement savings vehicle for most working Americans, according to a survey by Willis Towers Watson (NASDAQ:WLTW), a leading global advisory, broking and solutions company. The survey found more employers are adding “automatic” and Roth design features to their 401(k) plans, boosting employer contributions, streamlining investment choices and improving fee transparency.
“Helping employees with their long-term financial security has emerged as a very high priority for employers,” said Tammy Hughes, senior retirement consultant, Willis Towers Watson. “With most employers now offering a DC plan as the primary retirement savings vehicle, they have become very focused on how to improve their plans and deliver better outcomes to participants. The enhancements they are making should go a long way toward encouraging greater participant savings as well as wiser investment decisions.”
The survey found more companies are adopting automatic features to their DC plans. Nearly three in four respondents (73%) now automatically enroll new participants, compared with 68% in 2014 and 52% in 2009. Additionally, 60% of respondents provide an auto-escalation feature, up from 54% in 2014. These automatic features can significantly improve an employee’s retirement readiness.
Other improvements plan sponsors reported making to their DC plans include:
Is there additional opportunity for sponsors to focus their retirement readiness efforts?
Only a third of respondents (35%) measure the retirement readiness of their participants annually, and the vast majority (88%) only measure basic plan statistics, such as participation rate, account balance and contribution rate. Additionally, 83% of investment committees at the largest plan sponsors say their top priority is to improve retirement readiness and associated workforce risks, yet only 17% spend time at meetings on retirement readiness.
“Given the high priority plan sponsors place on retirement readiness, there is still a significant opportunity for plan sponsors to measure the success of their programs based on outcomes and to conduct this evaluation regularly. Also, sponsors can evaluate the efficiency of their plan operations and investment management. If needed, they can make changes to adopt more efficient models, such as delegating investment decisions to an internal subcommittee, which could allow time to focus on measuring plan outcomes,” said Kerry Bandow, senior consultant, Willis Towers Watson.
About the survey
The Willis Towers Watson 2017 Defined Contribution Plan Survey was conducted in November 2017. The results are based on responses from 349 large and midsize U.S. companies that sponsor a defined contribution retirement plan.
About Willis Towers Watson
Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has more than 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
Ed Emerman: +1 609 275 5162