Responding to new financial and legislative pressures, employers are reexamining the retirement benefits they offer. A new study by HR consulting firm Hewitt Associates finds 2007 will be a year when employers focus on managing costs and risks, building retirement education for employees and offering more guidance on ways to maximize workers' retirement options.
"Recent legislative and financial developments, coupled with rising cost pressures, are causing many employers to reassess their retirement programs to ensure they are aligned with business objectives and have the appropriate impact on employee engagement and satisfaction, the ability to attract and retain new workers, and on workforce productivity," says Pamela Hess, director of retirement research at Hewitt. "At the same time, companies remain skeptical about employees' abilities to take accountability for their own retirement future, and as a result, they will continue to take more aggressive steps to equip workers with tools that help improve their saving and investing habits."
Steps companies will take:
* Move beyond automatic enrollment. Many plan to increase the default contribution rate and others plan to change the default investment fund to a Qualified Default Investment Alternative, such as a target maturity fund or managed account.
* Hold off on pension changes. The majority of companies offering pension plans are not likely to make changes to them in 2007. This is consistent with behavior over the last two years. However, change may be brewing: 6 percent of companies now offering pension plans say they are very likely to close participation to new employees.
* 43 percent of companies said they offer or were very likely to add a third-party investment advisory service, with one in five offering or planning to offer an in-person investment advisor.
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