Fewer Company Executives Say Workers Taking Own Financial Reins
Thirty-eight percent of human resources executives surveyed in late 2010 by Aon Hewitt “are confident that workers are taking accountability for their financial future,” down from 43 percent a year earlier, according to an Aon Hewitt news release issued Jan. 26.
Only 30 percent of the executives “are confident employees are sufficiently prepared for retirement, showing no improvement” between 2009 and 2010, the release said.
The latest survey, covering 210 midsize to large companies, was conducted in November 2010. The results were compared to a similar survey conducted in November and December 2009 that was published in early 2010.
Because companies are worried about employees saving for retirement, they are making additional plan design changes to increase participant savings rates and “promote responsible investing,” according to the release.
One change is increased automatic enrollment. Last year, 57 percent of defined contribution plans offered automatic enrollment compared with 24 percent in 2006, the release said. Among companies that do not offer automatic enrollment, 36 percent said they are likely to add the feature this year, the release said.
“Automatic contribution escalation is now offered by 47 percent of plans, up from 17 percent, and automatic rebalancing is offered by 49 percent of plans, up from 27 percent in 2006,” the release said. “More than a quarter of employers—26 percent—are likely to add automatic escalation in 2011, and a third are considering adding automatic rebalancing.”
The Aon Hewitt survey also found that once participants enroll in a 401(k) plan, “their investing habits are often suboptimal,” the release said. “Many employees are not investing in a diversified portfolio, are taking inappropriate risk and very few rebalance their portfolio regularly, if at all.”
The annual survey, which has been conducted since 2005, includes Aon Hewitt clients as well as other companies, MacKenzie Lucas, an Aon Hewitt spokeswoman, said in an e-mailed response to questions.
The survey of companies with a combined 6.2 million employees includes responses from firms with defined contribution, defined benefit and retiree medical plans, she said. Ninety-four percent of the companies in the survey have a defined contribution plan, she added.