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Increasing Retirement Savings a Focus for Employers in 2017

Posted Monday, January 16, 2017 6:15 am
Only fifteen percent of employers are satisfied with their workers' current savings rates, despite strong employee participation in employer-sponsored 401(k) plans.  According to a survey report issued by Aon Hewitt, employers are responding with plans to increase savings rates and expand financial wellbeing programs in 2017.
 
Aon Hewitt surveyed more than 250 U.S. employers representing nearly 9 million workers to determine their priorities and likely changes when it comes to retirement benefits. Key areas that employers will emphasize to improve 401(k) savings rates include:
 
  • Emphasizing retirement readiness. "Employers are making retirement readiness one of the important parts of their financial wellbeing strategy by offering tools and modelers to help workers understand, realistically, how much they're likely to need to retire," said Rob Austin, director of Retirement Research at Aon Hewitt. "Some of these tools take it a step further and provide education on what specific actions workers can take to help close the savings gap and can help workers understand that even small changes, such as increasing 401(k) contributions by just 2 percentage points, can impact their long-term savings outlook."

 

  • Focusing on financial wellbeing. Surveyed employers indicated an intention to focus on financial wellbeing by expanding the focus of program offerings to include help with managing student loan debt, budgeting and physical and emotional wellness. While fifty-eight percent of surveyed employers reported that they already have a tool available that covers at least one aspect of financial wellbeing, the Aon Hewitt report suggests that this percentage is expected to increase to 84 percent by year's end.

 

  • Refining automation. To help increase savings rates, employers will enhance automatic features including contribution escalation and automatic enrollment.  "Employers realize that automatic 401(k) features can be very effective when it comes to increasing participation in the plan," explained Austin. "Now they are taking an automation 2.0 approach to make it easier for workers to save more and to invest better."
 
Source: Aon Hewitt
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