401(k) Participants not as Knowledgeable as Employers Think

A new survey reveals that 401(k) participants don’t know as much about plan fees and investing as employers think they do.

The 11th Annual Transamerica Retirement Survey found many of the legislative and regulatory proposals regarding fee disclosure designed to offer summarized information and electronic delivery should be well-received by workers. A majority of workers surveyed prefer some type of summary in regards to fee information (55%), and respondents have a strong preference for electronic delivery of fee information – 74% would like it to be available on the plan provider’s Web site and/or electronic statements.

However, the survey also found a significant impediment to any new legislation or regulation’s potential effectiveness in informing workers is that 401(k) plan sponsors do not seem to be concerned with the issue. Approximately two-thirds of plan sponsors surveyed indicate they are not interested in receiving more information about fees.

In addition, approximately seven-in-ten plan sponsors say they think their employees are aware of fees, while only just over a quarter of workers say they are aware.

Although the majority of employers and workers agree that workers are receiving the right information to make decisions about the plan, most workers (68%) say they do not know as much as they should about retirement investing, and very few workers know “a great deal” about asset allocation (6%). More than half (51%) of workers guessed at their retirement savings needs.

Transamerica said the survey offers some promising insights on where to focus communication efforts to help raise levels of participant awareness and education. A large percentage of workers rely on financial Web sites, family and friends, financial planners/brokers, retirement plan provider Web sites, and print newspapers and magazines for education. Workers also state that larger tax-breaks and educational material that is easier to understand would motivate them to learn more about saving and investing for retirement. 

The survey report can be accessed from http://www.transamericacenter.org