The savings come from a one-year lowering of the Social Security payroll tax from 6.2% to 4.2% that ends in 2012. “The sooner employees start saving that two percent, the greater an effect it will have on their retirement account balances,” said Rick Ayers, vice president, Securian Financial Group.
Securian’s efforts to convince participants to use their Social Security tax savings for retirement goals include statement inserts and a Web site feature showing how the 2% could grow over time. There’s also a place on the Web site where employees can easily opt into the additional 2% savings.
A PLANSPONSOR NewsDash survey found 20.3% of sponsors indicated they already are encouraging participants to put the tax cut into retirement savings, while another 7.8% said they had not done so yet, but were either in the process of doing so or planned to (see “Survey Says:Have You Made a FICA-Inspired Participation Push?“).