Deloitte Survey Finds 401k Sponsors Not Optimistic About Employee Preparedness
While the bulk of employees and recent retirees remain confident that their 401(k) plan will provide for them well into the future, a newly released Deloitte poll found that most plan executives (84 percent) believe that only a select few percent of employees are adequately prepared for retirement. In fact, the survey found that the top goal of plan sponsors, for the second consecutive year, is to improve financial planning for employee retirement. Of the polled plan sponsors, 64 percent feel that part of their responsibilities is to take interest in retirement tracking and helping to ensure that employees are adequately planning for their futures.
About half of plan sponsors indicated that they are offering plan features that act to automatically increase employee contribution levels in order to encourage more participation in 401(k) plans. The impact of such action, however, seems minimal as 64 percent reported that less than 10 percent of plan members actually utilize the features. Further efforts by the U.S. Department of Labor have included 2010 regulations that require regular benefits disclosures to every 401(k) plan participant.
Despite the lofty goals of such regulations, polled plan providers and sponsors, who were required to deliver the first round of disclosures in January, felt left out of the loop. Only 39 percent of sponsors feel that they are very informed and included in the design process when developing methods to deliver the disclosures. Over half (56 percent) of respondents indicated that they are somewhat informed and included in the process.
Regarding plan fees, another issue plan sponsors aim to address, 79 percent of respondents feel that it is quite important to very important to increasing participant understanding of plan fees. A vast majority of plan sponsors (83 percent) reported that their fees are competitive. Over 70 percent of sponsors answered that the new disclosure requirements for fees are quite important or very important. Meanwhile, use of the auto-enrollment feature actually grew by 7 percent over the year.
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