Are you doing everything you can to keep your plan attractive to nervous employees? A new survey shows what other companies are doing — and what’s working.
The data comes from Deloitte Consulting’s 2008 “401K Benchmarking Survey” that asked 436 HR and benefits managers how they were adjusting their strategies to sign up and keep employees in their retirement plans.
Here’s what they’re doing and what the reactions are —
- Easy-enroll: 15% said they’re using “easy enrollment,” such as a postcard or another simple authorization form that employees can fill out quickly and become participants. That figure is up from 11% last year.
- Auto-enroll: 42% of the employers surveyed have an “auto-enrollment,” in which employees are automatically signed up as soon as they’re eligible. That’s almost double the number from the pervious year’s survey — 23% — and employees seem to like it: The satisfaction rate was 96%.
- Increased default and step-up rates: 68% said they’re using a 3% default contribution rate; last year only 53% were using a default rate that high. And 35% automatically increase deferral percentages on the participants’ behalf, nearly double the 18% reported last year.
- Easier eligibility: 48% made waiting periods a thing of the past; instead, they’re allowing employees to sign up on Day One of employment, and participation kicks in when the first paycheck gets issued.
Some other stats of interest you can use as benchmarks:
- Average participation rate of plans surveyed: 76%
- Average deferred percentage by nonhighly-compensated employees: 5.69% of salary
- Percentage of firms offering lifecycle investments that decrease in risk as employees age: 58%, and
- Percentage of employees age 25-34 who are very confident they’re saving enough for retirement: 18% — down from 31% a year ago.
Click here to see our survey of the most common types of retirement plans companies are offering today.