Employers are divided on whether 401(k) plans, which have become more common than traditional pension plans, are meeting employees’ retirement savings needs, according to a recent Mercer survey.

Mercer surveyed 180 employers who sponsor a 401(k) plan. Some (41 percent) also sponsor an active pension (defined benefit) plan, of which 63 percent are open to new hires; an additional 26 percent sponsor a frozen defined benefit plan. The responses “reveal a striking difference of opinion on the success of the 401(k) to date and whether the existing system can address the obstacles to success such as poor participation and market volatility,” Mercer says.

Employers with defined benefit plans open to new entrants tend to see it as a shared responsibility (81 percent) or predominantly the employer’s responsibility (15 percent), Mercer reports. Among respondents that have suspended their matching contributions to the 401(k) plan, only 54 percent believe retirement is a shared responsibility, while 46 percent said that employees bear the bulk of the responsibility.

Employees’ failure to participate in their employer’s plan was cited by 38 percent of respondents as the most critical obstacle to meeting retirement income goals. “Low participation is the challenge most difficult to address during a recession,” says Mercer spokesperson Amy Reynolds. The second largest group (32 percent of plan sponsors) named inadequate savings rates as the most critical obstacle, while only 17 percent cited the volatility of financial markets. Sponsors indicated that poor participation and poor investment decisions can be addressed, although there is support for additional regulations in these areas, with 49 percent of sponsors looking for help with investment decisions. On the other hand, sponsors are split on the ability of the 401(k) to ever provide adequate retirement benefits, with 50 percent believing adequacy can be addressed either now or through additional regulations while the other 50 percent disagree or are unsure, Mercer says.