May 24, 2012
--- As concern over benefits costs rises, companies also
worry about their employees’ ability to save adequately within defined contribution (DC) plans, a
Prudential survey found. ---
More employers are likely to move to a
benefits model that emphasizes employee choice, according to “The Future of
Retirement and Employee Benefits,” which surveyed senior finance executives
this year. A majority of respondents (69%) expressed concern that employees
might have to delay retirement because of inadequate savings. Delaying
retirement can have an impact not just on employees—it can constrict new hiring
and overhang advancement for existing staff.
Executives agreed that DC plans need enhancements and are
scrutinizing retirement income, risk-mitigation products and investment
strategies to enable more employees to retire as planned.
Robert Tipp, chief investment strategist for Prudential, predicts
that bonds will become a more significant part of plan portfolios. “Bonds do better than people
expect,” he told PLANADVISER. “People
expect a zero or negative bond return, but it’s been higher. People need a
continuing return on principal, and they are sick of stocks, sick of real
estate.”