Saving struggles: Even with programs that automatically enroll employees in
401(k) retirement plans, employees are still struggling to save for retirement,
according to a study by Hewitt Associates. In a related study, the Employee
Benefit Research Institute said participation of full-time workers in employer
retirement plans fell to 53 percent in 2007 from 55 percent in 2005. As a
result, plan sponsors are not only increasing automatic enrollment efforts but
are focusing on making sure their plans enroll employees in ways that maximize
retirement savings.
In 2007, 34 percent of companies automatically enrolled their employees in
their 401(k) plans. Of that number, 77 percent defaulted employees into
diversified portfolios such as target-risk, target-maturity or balanced funds,
up from 35 percent in 2005. More companies are also setting default
contributions 3 percent higher. Another goal of plan sponsors is to make
investing easier for employees. More employers—42 percent—are offering automatic
rebalancing of portfolios, up from 26 percent in 2005, and three-quarters of
employers surveyed say they offer target-risk and/or target-maturity portfolios,
according to the survey.
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