Despite employers' increased adoption of automated 401(k) plan features, employees continue to struggle with proactively saving and investing for retirement, according to a survey by Hewitt Associates.
In response, the human resources company says in the survey, employers are taking more steps to prepare their employees for retirement.
Hewitt, of Lincolnshire, Ill., conducts the survey every two years, polling more than 300 midsize and large companies that offer 401(k) plans. In the latest, only 25% of companies viewed a high participation rate as the primary measure of success for their plans, down from 43% in 2005, and many said they were focusing on their 401(k) plan's ability to facilitate a sufficient retirement income for their employees.
As a result of this shift in priorities, more companies are structuring their 401(k) plans to not only ensure that employees participate, but also help improve the quality of participation once they are enrolled.
According to the survey, 34% of companies automatically enrolled employees in their 401(k) plans in 2007, up from 19% in 2005.
Of those, more than 77% defaulted employees into a diversified portfolio, such as target-risk, target-maturity, or balanced funds, up from 39% in 2005.
In addition to automating their 401(k) plans, an increasing number of companies are continuing to offer workers tools that automate and simplify the 401(k) investment selection process. Forty-two percent offered automatic rebalancing in their plans, up from 26% in 2005 and 11% in 2003. Seventy-seven percent of employers now offer target-risk and/or target-maturity portfolios, up from 63% in 2005.
