Retirement Survey Results–How Do You Compare?

Only 33% of those who answered the question, however, automatically enroll employees, though 2.5% plan to implement auto-enrollment in the future.

Other survey highlights:

• Most common match amount is up to 6% of salary (25% of respondents).
• Nearly half (48%) of employers offer more than 15 investment options.
• 26% plan to add a defined contribution plan; 3% plan to eliminate one.

Here are the detailed survey results. How does your organization measure up?

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Employee contributions

When the employee enrollment in defined contribution plans is automatic, the percent of employee earnings initially contributed is less than 3% for 27% of the employers who responded to this question in our survey. It is 3% for 43% and 4% of employee earnings for 12%. The employee contribution is 5% of their earnings for 7% and 6% of earnings for 6% of them. So, on average, more than 6% of their earnings is contributed for 6% of survey participants.  

The number of employees that voluntarily participate in their 401(k) or 403(b) plans is less than 30% for 26% of the employers participating in our survey, 31% to 70% for 35% of them, and above 70% for 39%.

The percentage of their earnings that employees begin with when contributing to voluntary 401(k) or 403(b) plans is less than 3% of base salary for 25% of our survey participants. It’s 3% of earnings for 30% and 4% of salary for 16%. Responses to our survey show that employees begin their contributions at a rate of 5% of their base salary for 14% of employers, at 6% of salary for 12%, and over 6% of earnings for 3% of employers.

The practice of employees adding the “cash-out” for their unused vacation or sick time to their 401(k) or 403(b) plans is permitted by 5% of employers and 3% are considering whether to allow it.

The maximum amount an employee may contribute annually to their 401(k) or 403(b) plan for 93% of employers is the highest amount allowed by the IRS, which is $17,500 for 2013.

Employer Contributions

Though 18% have never provided an employer match, the majority (59%) of the employers responding to our survey that offer a 401(k) or 403(b) plan to their employees also provide a matching contribution. Though 10% temporarily stopped their employer match in recent years, 13% maintained their matching contributions throughout the recent recession.

The level of employers’ matching contributions:

Matching employee contributions dollar-for-dollar is the practice for 38% of employers. A match rate of 75¢ to the dollar is the norm for 2%, 50¢ on the dollar is provided by 31%, and 25 cents per dollar of employee contribution is standard for 12% of employers.

The requirement for vesting of employer contribution is 5 years of service for 27% of employers and 13% require more than 5 years. Less than a year of service is required by 21% of employers, 1 year is required by 18%, 2 years is the rule for 6%, 3 years is required by 11%, and 4 years is the vesting level for 4% of employers.

Plan Features

More than 15 investment options are offered by 48% of employers and 11 to 15 options are offered by 28%. Another 16% offer 6 to 10 investment options and 8% of employers in our survey offer 1 to 5 options.

Target Date/Life Cycle funds are available for 64% of survey participants. The in-plan Roth conversion, a feature made available by the Small Business Jobs Act of 2010, is available for 25% and 4% are planning to add the feature.

Other retirement benefits offered by our survey participants include: defined benefit plans (23%), Roth 401(k) (30%), 457 plan (11%), profit sharing (21%), stock options (4%), employee stock ownership plan (6%), union-sponsored pension plan (3%), and/or SIMPLE or SEP (27%).

Retirement benefits in 2013 are about the same as 2012 for 85% of survey participants and more generous for 6%. It’s been 4 years or more since 29% of our survey participants conducted a comprehensive review of their retirement benefits package. A thorough review was conducted in 2012, however, by 46% and in 2011 by 15%.

Benefits Planning and Administration

When it comes to determining which retirement benefits to offer, 38% work with a consultant to create their plans and 31% evaluate the benefits offered by other companies and their competitors. An employee survey to find out what they have an interest in is conducted by 9%, and 44% are guided by the cost to the company.

Retirement benefits are managed in-house by 14% of those who responded to this question in our survey. Some of the administration of benefits is outsourced by 44% and all administration is outsourced by 42%.

Our survey shows that 11% plan to add or make changes to their retirement benefits package in 2014, 61% of employers have no additions or changes planned, and 27% are not certain at this point in time.

For those who are planning to add or make changes to their retirement benefits:

The addition of a defined benefit plan is planned for 5% of our survey participants, and 9% expect to increase the employer contribution to their existing plan. For 10%, however, a reduction in the employer contribution to their defined benefit plan is expected and for 4% their defined benefit plan will be eliminated altogether. The trend of moving to a defined contribution plan continues with 26% of the surveyed  employers answering this question planning to add such a plan and 23% planning to increase the employer match to their current, defined contribution plan. Another 4%, however, plan to reduce their employer match.

It’s an even split when it comes to whether employers offer financial planning assistance to their employees with 48% offering such assistance and 48% not providing this service to employees. The remaining 4% aren’t sure whether this benefit is offered.

Early retirement is an option for the employees of 16% of our survey participants. It is not offered by 78%, though, and 6% aren’t sure. Of those that do offer early retirement, 19% ask those employees to sign a waiver/release of claims against the company. Surprisingly, 55% do not make a waiver/release a requirement, and 27% are not sure.

1261 Survey Participants

Of the participants responding to our survey, 42% have a workforce with 20% or less exempt employees. Another 33% have a workforce that is 21% to 50% exempt and 26% have a workforce with more than 50% exempt employees. Unions represent employees at 20% of our survey participant employers.

Privately held organizations are represented by 53% of survey participants and nonprofits account for 20%. Public corporations make up 11% and governments are represented by 7%. Industries include manufacturing (19%); health care and social assistance (13%); finance and insurance (9%); and professional, technical, and scientific services (8%). Educational services represent 6% of our survey participants, and retail trade accounts for 3%. 

Positions held by our 1,261 survey participants:

Thanks to all 1261 employers who participated in the survey!

Next survey topics:

• Employee perks
• Training and development
• Performance management