UNEMPLOYMENT
INSURANCE / SOCIAL SECURITY
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Retirement plan participants appear to be responding to the current economic and financial crisis by delaying retirement, saving less and re-aligning their retirement investments, according to an International Foundation of Employee Benefit Plans (IFEBP) survey. The survey was conducted the week of October 20, 2008 and includes responses from 1,089 plan sponsors, representing a cross section of three employee benefit sectors: corporate, public and governmental, and multiemployer plans. The results demonstrate the concerns and actions of the different plan sponsors. In this survey of retirement plan sponsors and trustees, nearly half of respondents ( 46%), stated their employees and plan participants are considering delayed retirement. Furthermore, 38 percent of plan sponsors noted that their employees are concerned about not saving enough for retirement.
Survey respondents not only reported a jump in the number of plan participants considering delaying retirement, but a quarter of respondents cite an increase in the actual number of eligible workers postponing retirement. Survey results also show that during the last six months, 28 percent of plan sponsors have noticed an increase in the number of plan participants taking loans from defined contribution (DC) accounts. Representatives of corporate plans were much more likely to observe this trend, with 44 percent reporting an increase. Moreover, 29 percent of respondents believe the current economy has prompted greater numbers of hardship withdrawals. Similarly, corporations (37%) were more likely than public (24%) and multiemployer (21%) to note this increase.
Corporate plan sponsors were the most likely to report that plan participants are primarily concerned about their inability to save enough for retirement (51%), while representatives of multiemployer and public plans were most likely to report underfunded defined benefit (DB) plans as the major concern of their plan participants (55% and 39% respectively). In response to increasing concern, 20 percent of DB plan sponsors have made changes to their strategic asset allocation in order to reduce risk and protect assets. Only 7 percent of DC plan sponsors have made changes to their investment product offerings as a result of the economic turmoil; however 22 percent are considering making changes in the future.
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