Employees want their employers to take a more active role in their retirement plans but employers are reluctant to do so, primarily because of fiduciary concerns, according to Northern Trust.

In a survey of more than 1,000 participants in 401(k) and other defined contribution (DC) plans, the financial services firm found that 88% strongly or somewhat favor their employers providing tools to help determine if they are saving the right amount for a financially secure retirement.

Eighty-four percent of respondents said employers should provide incentives to encourage contributions and 72% think employers should suggest appropriate contribution amounts. More than 80% said they would consider taking their employer’s advice when determining their contribution to a 401(k) plan.

“Simply providing participants with a DC plan and retirement planning tools are not sufficient to ensure they will adequately plan and save for retirement,” Susan Czochara, senior product manager for DC Solutions at Northern Trust, said in a news release. “Our survey indicates that employees would welcome, rather than resent, a stronger guiding hand from their employers.”

But the 43 plan sponsors interviewed by Northern Trust appeared reluctant to provide that guiding hand.

“Plan sponsors generally agree it’s important to encourage saving for retirement,” said Jim Danaher, managing director of DC Solutions at Northern Trust. “They have real concerns, however, about providing participants with targeted recommendations — by salary level or age — about how much they should be saving.”

The interviews with sponsors revealed that the primary roadblock to more proactive management of DC plans is fiduciary concerns about making prescriptive recommendations.

“Policy issues, such as management’s role as a fiduciary, must be clarified before senior leaders will be comfortable providing the level of guidance sought by plan participants,” Northern Trust said.

More than 88 million U.S. employees now participate in a 401(k) or similar DC plan and such plans now hold more than $6.8 trillion in assets.

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One response to “Workers Want More Retirement Help From Employers”

  1. People know they need to plan and save for retirement, but unfortunately they don’t act because they lack knowledge about its importance and doesn’t know where or how to start doing it. Providing a strong guiding hand in retirement planning is a good start for employees, it will urge them to start saving and preparing for the future. Employers are the best source of that guiding hand. It is even better if they will also include long term care planning or ltc insurance coverage among the benefits of employees. This will strengthen their retirement plans and give them more confidence to face the future.

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