Most Employers Don't Plan to Reduce Contributions

Even as news reports of companies suspending employer match contributions to defined contribution plans continue, a Mercer survey reveals 83% of employers do not expect to reduce their level of employer contributions.

However, 17% of polled employers are considering doing so, according to a Mercer press release.

More than three-quarters of respondents (77%) said they expect to review investment and administrative fees, which Mercer said may be due to pressure from regulators as well as the decline in investment values. Eighty-five percent of respondents reported they will likely enhance employee education and communication regarding investment choices, objectives, and options—and three-quarters of respondents will likely review their fund line-ups, Mercer said.

In line with their anticipated actions, when asked to gauge employee concerns related to the economic turmoil, 54% of respondents said that employees expressed a significant level of concern about the impact of economic turmoil on their retirement investments, compared with 37% who said employees expressed significant concern about the health of the company, and 34% who said employees have a high level of anxiety regarding their job security.

For defined benefit plans, employer focus will be primarily on understanding and reducing risk. Changing investment strategy (46%) is reported by survey respondents as the most likely method companies will take to reduce risk rather than changing funding policies (31%). Twenty-four percent of respondents are considering cutting back or stopping accruals, but only 4% say they are very likely to do so.


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