Employers Put Retirement Plan Changes on Hold

An Aon Consulting survey indicates employers are taking a wait-and-see approach before changing their retirement programs.

Aon Consulting surveyed 1,313 employers nationwide in its 2009 Benefits & Talent Survey and found that more than 90% are not changing their retirement programs, in terms of benefits or management.

According to Aon, despite the fact that 64% of responding employers said there was an increase in investment-related questions from participants in 2008 versus 2007, only about a third of these organizations increased their communications around the importance of saving for retirement last year, while 62% said their communication remained unchanged from the previous year.

Fifty-six percent of respondents offer matching contributions on defined contribution (DC) plans, and most did not cite changes to their matching contributions; but Aon said some financially constrained companies did suspend or modify their matches during the economic downturn. Additionally, 41% of employers have an automatic enrollment plan, with 53% implementing a default at 3%, and nearly all (99%) planning to keep their default percentage the same this year.

Employees Also on Hold

The overwhelming majority (87%) of surveyed employers also said employees are delaying retirement due to economic conditions.

A third of employers have less than 70% of their employees enrolled in their DC plans, with the majority (67%) saying they believe workers are not enrolled because they cannot afford it. According to Aon, 38% of these employers believe employees have little knowledge of the funds needed for retirement, and 52% said employees have only some idea of what is needed to retire with enough funds.

Just 8% of employers said they believe their employees have a strong understanding of the amount of funds needed in retirement.

More information about the study is available here.