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Focus also is on reducing retirement plan costs, increasing auto features
In addition to offering retirement savings advice, employers are adding financial wellness programs that help workers budget, save for a home and more.
According to a
recent Aon Hewitt survey of nearly 250 large U.S. employers, 93 percent intend to focus this year on the financial well-being of their employees in ways that extend beyond retirement:
Additionally, the percentage of employers that have recently moved from mutual funds to institutional funds or
separately managed accounts has almost doubled, from 16 percent a year ago to 30 percent today.
“Employers’ focus on financial wellness has been steadily picking up steam in recent years. This year, even more organizations will address this topic head-on and help workers think beyond just saving enough for retirement and consider all aspects of their financial health,” said Rob Austin, director of Retirement Research at Aon Hewitt, in a news release. “Depending on the individual needs of their employee populations, companies are offering features like basic budgeting help, while others are providing assistance on how to save for life events like a home purchase or college.”
Reducing Employees’ Costs
The survey also found that large companies are more carefully reviewing the costs associated with their defined contribution retirement plans and are using their scale and purchasing power to make changes that may improve returns for workers:
“Employers understand that small plan fees can add up and ultimately make a big impact on workers’ retirement savings," explained Austin. “To help workers maximize their retirement dollars, employers are scrutinizing each fund in the plan to determine if the associated fees are reasonable.”
Improving Automatic Features
A majority of big companies now offer automatic features in their 401(k) plans to ensure that workers are saving enough to receive full company matching contributions over time, according to
a related Aon Hewitt survey of approximately 100 large plan sponsors.
The survey also showed that 70 percent of large companies now automatically enroll plan participants, and that:
“In the past, employers automatically enrolled workers into 401(k) plans at low rates and workers often wouldn't increase their contributions enough to reach the full company match—to the detriment of their retirement savings," explained Austin. "Because many employers gauge the success of their plan by the number of workers saving enough to receive the full match, they understand that they need to give workers an added boost by either starting them off at a more robust savings rate or automatically escalating contributions over time up to or beyond the match threshold. That extra savings can have a remarkable impact on workers' long-term savings outlook.”
Of companies that have not implemented automatic enrollment:
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
Related News Article:
Why Your Employer May Be Your Best Financial Adviser,
Time, January 2015
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