AON: Employers are Taking Action to Help Workers Close the Retirement Savings Gap
Aon Hewitt's survey of more than 360 employers, representing over 10 million employees, shows 401(k) plans are shifting in three key areas:
Company Match: To encourage workers to save more, employers are putting more "skin in the game."
- 42 percent of companies match dollar-for-dollar, up from 31 percent in 2013.
- Before 2013, \\$0.50 per \\$1.00 was the most common formula.
Automatic Enrollment: Employers are defaulting employee contributions at a higher rate. Of the employers that automatically enroll their workers:
- 52 percent automatically enroll workers at a savings rate of 4 percent or more, up from 39 percent of employers in 2013.
- 51 percent default workers at or above the company match threshold, nearly 10 percentage points higher than in 2013.
Back-sweeping: Most employers only automatically enroll new hires, but many are taking action to ensure more workers participate in the plan. Currently, 16 percent of employers automatically enroll all eligible employees (also called "back-sweeping") on an ongoing (annual) or one-time basis—double the percentage that did so in 2013.
"With more workers falling short of their retirement savings needs, employers are being more aggressive about making plan design changes that will help workers close the savings gap," explained Rob Austin, director of Retirement Research at Aon Hewitt. "While these tweaks to the plan may seem small, they can have a profound impact on workers' ultimate retirement wealth."
To see how workers benefit from these 401(k) plan changes, view Aon Hewitt's models here.
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