At a time when defined benefit or pension plans are growing scarcer, they have become a more potent recruiting and retention tool. Clearly, employees still value the security the retirement plans promise, based on the results of a recent Towers Watson & Co. survey.
Articles by Patty Kujawa
Wage and hour lawsuits are by far the most common type of employment litigation. The number of these lawsuits far outpaces any other form of employment litigation and verdicts and settlements are steadily increasing. What are employers doing to address this situation and to limit their liability?
A recent survey of 210 employers by consulting firm Aon Hewitt shows that 57 percent automatically enroll new workers into defined contribution plans. However, less than half automatically raise participants’ contributions.
While it is part of plan sponsors’ federally mandated fiduciary obligation to review provider services, experts say vendor turnover will continue to be active because of recent regulatory and legislative changes as well as a response to an improving economic climate.
New Labor Department regulations require defined contribution plan sponsors to supply information on revenue sharing and more detailed data on fees and expenses to participants.
Some employers are more proactively educating workers about insufficient contributions to their 401(k) plans, a trend that’s expected to persist into 2011. One company, after mailing nearly 17,000 personalized letters about current employee investing levels, tracked a 45 percent increase in contributions.
Increased costs also worry some as the rule extends fiduciary liability to ESOP valuation firms and significantly strengthens the Labor Department’s ability to file lawsuits against them for faulty appraisals.
While many employers offer some form of investment advice, a recent national survey shows that employees are slow to tap that expertise. One Minneapolis-based construction company has been able to better connect with employees by hosting a series of financial workshops.
As retirement calculators become more sophisticated, employees can gain better insights into how much they need to save. But the number of steps involved, as well as the underlying statistical models, can dramatically alter that bottom-line figure.
Despite the growth in 401(k) plans, nearly half of Americans ages 56 to 62 haven’t saved enough for retirement, according to a recent Employee Benefit Research Institute analysis. Defined-contribution plans don’t reach some employees, including those working in small businesses. Even BrightScope, the relatively young defined-contribution ranking company, is only now establishing a plan.