As awareness of the retirement crisis in America grows, plan sponsors have stepped up their efforts to help employees understand their options and have started making changes in their plan designs to encourage additional savings.
There’s still a long way to go, however, according to a survey by J.P. Morgan Asset Management of nearly 800 professionals who work with 401(k) plans.
The survey found that caring about employees’ well-being and finding ways to retain them top the list of plan sponsors’ goals.
Three-quarters of plans sponsors also rate “increasing the financial security of employees” and “helping to ensure that employees have a financially secure retirement” as highly important.
Yet while their hearts are in the right place, particularly at larger plans, some of the criteria they use to measure their plans’ success do not fully reflect this goal, J.P. Morgan found.
While 82 percent view participant satisfaction and investment performance as highly important measures of success, only about 40 percent view the number of participants with account balances on track to provide retirement security as an equally important indicator, the study found.
In addition, the majority of plan sponsors have not readily adopted innovative design features like automatic enrollment and automatic contribution escalation.
The biggest reason plan sponsors say they don’t yet offer these options is that employees would be upset about not having control over their own finances.
But J.P. Morgan’s survey found that 60 percent of plan participants are in favor (or neutral) about such features and fewer than 20 percent actually disapprove. Most plans that offer these features give participants an opportunity to opt-out.