The 2014 North American Defined Contribution Plan Sponsor Survey surveyed 457 employers. Over 80 percent said retirement security will become a more important issue for their employees in the next three years. Only twelve percent believed employees know how much they need for a secure retirement, and only 20 percent believed their employees feel comfortable making investment decisions.
Another top concern is older workers delaying retirement due to a lack of savings. Employers are concerned about this because delayed retirements can affect the bottom line. Employees who stay on the job when they would rather retire are less engaged and productivity can drop.
What can your organization do to help its employees?
- Train periodically on retirement options your employees have available to them, along with the importance of financial planning, along with planning for what to do in retirement.
- Offer simple but diverse investment lineups with target-date funds for ease of use.
- Provide an automatic increase feature for participants’ contributions annually, and consider mandating it.
- Make available an option to make Roth contributions, which provide for tax free income in retirement.
MSEC can help employers consider retirement options for their employees, make sure their plans are ERISA compliant, and help employees plan for retirement. Call us at 800.884.1328 for more information.