Deloitte Survey: Economic Stability Creates Renewed Confidence in Retirement Savings
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Among key findings, as the economy continues to recover, the No. 1 reason for lack of employee participation in defined contribution plans is no longer due to an "uncertain economy/job market" (14 percent in 2013 compared to 24 percent in 2012), but instead a "lack of awareness and understanding" (30 percent in 2013 compared to 21 percent in 2012).
"Defined contribution plans, both 401(k) and 403(b), now represent the main source of future retirement income for a wide and growing majority of the workforce," said
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This year's survey, conducted with the
Prioritizing Education
Plan sponsors are also aware of this reality and consistently rate the No. 1 barrier to a more effective plan as lack of employee understanding (30 percent), an unchanged finding from year-to-year. When looking at the top areas of confusion, the study found that employees don't know what funds to invest in (55 percent) followed by not knowing how much to save for retirement (35 percent). "When it comes to education, more is not necessarily better," said Sandler. "Employers should consider pursuing a simplification strategy designed to deliver the right mix of educational resources to employees based on the demographics of their workforce."
Expediting Match Eligibility
The survey found that companies are also showing renewed confidence in the economy and taking steps to make defined contribution plans more accessible and attractive to employees. For example, immediate eligibility for matching contributions increased to 62 percent in 2013, up 6 percentage points from 2012. At the same time, 43 percent of employees cited taking advantage of the company match as the top reason for participation, unseating a personal desire to save for retirement (39 percent).
"While immediate eligibility for match and automatic enrollment continue to drive employee interest, there is still work to be done," said Sandler. "Many employees perceive available education tools as too complex and intimidating. Retirement planning is unique for every individual, but many tools are created with a one-size-fits-all approach. Having the ability to recognize the gaps within the system is a solid first step in implementing effective remedies and reaching employees through their preferred channels."
"Despite encouraging data regarding the increase in defined contribution plan balances, there is still more that needs to be done to recalibrate communication and education strategies," said
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About the Survey
Deloitte's 2013-2014 Annual
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Deloitte helps organizations effectively manage their human capital to drive business growth. It does this by leveraging advanced analytics to develop talent management and business-driven HR strategies to deliver results. Deloitte is a leader in human capital consulting, bringing a unique combination of business, industry and HR knowledge, supported by the breadth of services and capabilities of a multidisciplinary professional services organization and the
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