By Jerry Geisel, Crain News Service
CHICAGO (Oct. 27, 2015) — As 401(k) plans have increasingly become employees' sole retirement savings plans, employers are beefing up the plans, according to a new Aon Hewitt survey.
With more than 360 employers surveyed, 42 percent of employers fully match employees' salary deferrals in 2015. That's up from 31 percent in 2013 and 25 percent in 2011, the survey found.
In addition, 52 percent of employers with an automatic enrollment feature set the initial pretax employee contribution rate at 4 percent or more of salary this year, up from 39 percent in 2013. Automatic enrollment is directed at those employees who don't respond when asked if they would like to participate in their employer's 401(k) plan.
Employers also are bumping up how much the employee contribution rate in automatic enrollment programs will increase each year. Sixty-four percent of employers now cap the contribution rate at 10 percent or more. In 2013, 50 percent of employer capped the contribution that high.
“As defined contribution plans have become the primary retirement savings vehicle for most U.S. workers, employers understand that they play an important role in ensuring their workers are saving enough for retirement. Improvements like increasing automatic enrollment defaults, or enhancing the company match can make a huge impact of workers' retirement nest eggs,” Winfield Evens, director of investment strategy and solutions at Aon Hewitt in Lincolnshire, Illinois said in an email Oct. 20.
The survey also found that 58 percent of employers give employees the opportunity to make contributions to Roth 401(k) plans this year, up from 50 percent in 2013 and 11 percent in 2007.
Contributions to Roth 401(k) plans are made on an aftertax basis, but unlike pretax contributions to traditional 401(k) plans, can be withdrawn tax-free.
The survey was conducted earlier this year.
This report appeared on the website of Business Insurance magazine, a Chicago-based sister publication of Tire Business.