Survey Results Have Glum View of Retirement Preparedness
An Aon Consulting survey of employers revealed a somewhat gloomy picture of how prepared their workers are for retirement.
Aon’s 2009 Benefits & Talent Survey showed 38 percent of employers believe their employees have little knowledge of how much they’ll need for retirement, and only 8 percent think their workers have a strong idea of how much will be needed.
However, 64 percent said more employees were asking investment-related questions in 2008 than a year earlier, but only about a third of these companies increased their communications about the importance of saving for retirement last year, while 62 percent left their communication methods unchanged from a year earlier.
“Retirement security for working Americans will soon become a challenge for policymakers and employers, along the lines of health care reform,” Amol Mhatre, senior vice president responsible for retirement innovation with Aon Consulting, said in a news release about the survey. “With a trend toward individual responsibility, increased mobility, complex investment choices, rising cost of health care and improved life expectancy, employers may have to do more to help workers understand and plan for their retirement needs.”
Among other survey results, one in three employers said that less than 70 percent of their employees are enrolled in their defined-contribution plans. Of those employers, 67 percent said their workers can’t afford to enroll.
Only 45 percent of employers offer a defined-benefit plan to their employees; of those, 41 percent have closed their defined-benefit plans to new entrants, 25 percent have frozen their plans entirely and do not have a strategy regarding plan termination, and 20 percent have frozen their plans and intend to terminate the plan once funding allows.
Fifty-six percent of respondents offer matching contributions on defined-contribution plans. Of those, about half provide a match of more than 3 percent.
Additionally, 41 percent offer automatic enrollment, with 53 percent of them using a 3 percent default rate. Nearly all of those with automatic enrollment plan to keep their default percentage the same this year.
Aon surveyed more than 1,300 employers nationwide.