A recent study conducted by Hewitt Associates, a human resources services company, showed that more employers are focusing on a retirement plan’s ability to assist employees in accumulating a sufficient nest egg for retirement.
Previously, it seemed that employers were focused solely on their participation rates. In 2005, 43% of employers viewed a high participation rate as a measure of success for their 401(k) plan. In the 2007 study, however, only 25% of companies felt this way.
The study showed that 34% of companies automatically enrolled their employees into their 401(k) plans, up from 19% in 2005. Of those, 77% defaulted their employees into a diversified portfolio, such as target-risk, target-maturity or balanced funds. In addition, 83% of companies set their default contribution rate as 3% or more, compared to 66% in 2005, while 28% used contribution escalation with automatic enrollment. These numbers seem to indicate that employers are becoming more concerned with making sure their employees have a large enough balance in their 401(k) accounts upon retirement.
NADART is pleased to be able to offer plan sponsors with a wide choice of funds, including target-dated and balanced funds, in order to provide a diversified portfolio for their employees. We also offer features such as automatic enrollment and Roth 401(k) plans. To learn more, please complete the Product Information Request Form.