Benefits May 7, 2012

Employees Not Taking Advantage of 401(k) Plan Offerings

May 7, 2012 (PLANSPONSOR.com) - Despite efforts by employers to educate workers on their 401(k) offering, most workers are not taking full advantage of their plans.
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More than half (54%) of employers report that employees participating in plans are not taking full advantage of the investment options, features and services offered in connection with their 401(k) plan, according to a survey by Charles Schwab.    

In order to better engage employees, the majority of employers plan to make as much or more extensive use of traditional outreach methods, including interactive planning tools (93%), printed educational materials (93%) and in-person workshops (81%). Only 16% of employers plan to adopt or promote personalized savings and investment management through a third-party adviser.  

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A growing number of employers are using or considering the use of automatic solutions. In total, 45% are currently auto-enrolling employees and another 25% are very or somewhat likely to do so.   

In July and August 2011, CFO Research Services conducted an online survey and gathered responses from 215 senior finance and human resources executives at U.S. companies with annual revenues of $100 million or higher.
Benefits May 7, 2012

401(k) Participants Mostly Unengaged in Retirement Planning

May 7, 2012 (PLANSPONSOR.com) - More than half (52%) of 401(k) participants surveyed by Charles Schwab say they do not have the time, interest or knowledge to properly manage their 401(k) portfolio.
Reported by

Nearly three-quarters (73%) spend less than eight hours per year managing their 401(k) plan account. Many (56%) do not review plan-related education materials they receive.  

An interesting finding to consider for upcoming participant fee disclosure rules is that nearly one-third of respondent do not know they pay any fees for their 401(k) plan. Of the 70% that understand they pay some sort of fees, 95% do not know about investment fund operating expenses, and 67% do not know about plan administration fees.  

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A significant majority (83%) of those surveyed say they are interested in receiving professional investment management from their employer. However, this interest does not translate into action based on Schwab data that shows just one in 10 participants actually take advantage of 401(k) investment management advice when it is offered.   

A majority of respondents (61%) have calculated the savings they believe they will need for retirement. Among this group, 84% were confident that their savings would last.  

Respondents reported on average that they feel they need to bridge an eight-fold gap between how much they have saved and how much they calculated they would need in retirement.  

In August and September 2011, Koski Research conducted an online survey and gathered a total of 1,005 responses from a national representative sample of U.S. workers who were participating in their company’s 401(k) plan.

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