Although the percentage of employers offering matching contributions to their 401(k) or similar plan is consistent with last year’s survey (70% versus 69% the year prior), the survey found an encouraging sign that 51% of companies that recently decreased or suspended the match plan to reinstate it within the next two years.
Most employers (85%) believe that a 401(k) or similar plan is important for attracting and retaining employees, and most (85%) believe their employees view these plans as an important benefit.
However, according to the survey results, plan sponsorship rates of 401(k) or similar plans are significantly higher for large companies (94%) than small companies (76%). Large companies (79%) also continue to be more likely than small companies (69%) to offer a matching contribution to their 401(k) or similar plan.
Of those small companies that do not currently offer a 401(k) or similar plan, only 21% indicate they are likely to begin offering a plan the next two years. However, a larger percentage (34%) indicate they would be likely to consider joining a multiple-employer plan. Of companies that are not likely to offer a 401(k) plan in the next two years, the most common reasons are: difficult business conditions (47%), concerns about cost (43%), and perceived lack of employee interest (43%).
Underscoring a significant change from the year prior, 59% of employers expect their company’s financial situation to improve over the next 12 months (up from 49%) and almost half of employers (48%) expect the economy to improve over the next 12 months (up from 45%). Based on the study, employers are generally reporting higher levels of employment, with over half (55%) hiring additional employees in the last twelve months. This positive trend is more prominent with large companies where 69% hired workers compared to 54% of small companies. Additionally, fewer companies implemented layoffs or downsized in the last twelve months – 33% compared to 48% last year.
Education and Advice
The results of the 12th Annual Transamerica Retirement Survey reveal most employers (82%) feel their employees do not know as much as they should about retirement investing. Similarly, while there has been a gradual decline over the last three years in employers agreeing their employees could work until age 65 and still not save enough to meet their retirement needs, a full 70% of employers still agree (down from a high of 80% two years ago).
According to the company, since the recession began, few employers (15%) indicate they or their retirement plan provider has implemented any programs to help employees get back on track with their retirement savings. Large companies have been much more likely (34%) than small companies (13%) to have implemented any such programs.
Employers also have an opportunity to help employees transition into retirement. Among those employers who offer a 401(k) plan, 43% offer financial counseling and 19% offer pre-retirement seminars for employees who are transitioning into retirement. Large companies are more likely to offer both, with 53% of large companies offering counseling and 46% offering seminars. (In contrast, of those employers who do not offer a plan, 78% do “nothing” to help their employees).
The results of the 12th Annual Transamerica Retirement Survey – conducted among a nationally representative sample of 743 U.S. employers by the non-profit Transamerica Center for Retirement Studies – are here.