News & Information

 

FEATURED PRODUCT

Pension and Employee Benefits: Code, ERISA, & Regulations
This series provides an authoritative and comprehensive reference to the full text of benefits-related provisions of the Internal Revenue Code, the full text of ERISA, and related proposed and final regulations, as well as the official IRS and DOL preambles, and Committee Reports.

Learn More »

CCH® PENSION — 03/08/10

Employers to step up 401(k) matches in 2010: Hewitt study

Employers plan to step up their efforts this year to help workers maximize their 401(k) savings, according to a new survey by Hewitt Associates. High on employers' priority lists in 2010: restoring company 401(k) matches that were suspended or reduced during the market downfall and adding automated tools and investment features. The findings were based on a study of 162 mid- to large-sized U.S. companies representing 5.7 million employees.

According to the Hewitt study, a majority (54%) of employers are less confident today about their employees' ability to retire with sufficient assets than they were in 2009 (66%). Less than one in five said that they were very confident about their employees' ability to have enough retirement income to last throughout their retirement years.

Restoration of employer matches

To help employees meet their financial goals in retirement, Hewitt's survey found that 80% of companies that suspended or reduced their company match in 2009 are planning to restore it in 2010. In addition, the study found that nearly half (46%) of employers that do not already offer automatic rebalancing are very or somewhat likely to add it to their plan in 2010. Nearly four in ten (38%) are very or somewhat likely to add automatic contribution escalation to their plan.

Investment services and tools

The Hewitt study also found that an increasing number of employers are offering investment services and tools to help employees make better investment and savings decisions. About half (51%) currently offer online investment guidance and 42% are very or somewhat likely to do so in 2010. In addition, 28% of employers currently offer managed accounts, which allow workers to delegate the overall management of their accounts to an outside professional. One-quarter of companies indicate they are very or somewhat likely to offer managed accounts in the coming year.

"In the last 18 months, employees' 401(k) accounts took a serious financial hit due to the severe market downturn. Some of them also lost the additional retirement savings that their 401(k) employer match provided," explained Pamela Hess, Hewitt's director of retirement research. She noted that, while there has been marked growth in 401(k) balances since the market recovery began, too many employees are not saving and investing in a way that will help them achieve their retirement goals. "Employers are trying to do their part to help --which is why they are restoring their matching contributions and offering features and tools that push workers to save more throughout their working years," Hess said.

Source: Hewitt Associates press release, February 8, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

Visit our News Library to read more news stories.