Key findings by Aon Hewitt include:
- Participation rates rose to an all-time high of 78%.
- The participation rate is 81.4% for those under automatic enrollment, compared to 63.5% for those who are not.
- The average account balance is now $81,240, versus $57,150 in 2008.
- Nearly 40% allocation to premixed portfolios is up about 13 percentage points in two years.
- Average allocation to company stock has dropped from 41.8% in 2002 to 13.4%.
Key recommendations include:
- Fully implement and expand the scope of automated features, as inertia tends to work in favor of the participant. These features should include automatic enrollment, increased default contribution rates, automatic escalation, automatic rebalancing, stretching of the matching contribution rate, and expanded enrollment to nonparticipants.
- Include investment advisory features such as target-date funds, online guidance, investment advice, and managed accounts. Offer seminars, personal financial planning, and lifetime income solutions.
- Reduce plan leakage by modifying loan rules to reduce the amounts borrowed and owed, while making it easier to repay the loans after employment is terminated by not limiting repayment to payroll deduction.
- Take advantage of new technologies. Reaching participants via webinars, podcasts, text messages, and social media can be very effective.
"One of the dominant themes of Aon Hewitt’s 2013 Hot Topics in Retirement report is that plan sponsors are embracing a more holistic perspective on their retirement programs. They are focusing on financial wellness and measuring projected retirement income adequacy, instead of merely concentrating on current participation and savings levels."
Recognizing that employees do in fact want to save for retirement but are finding it difficult to do so should go a long way toward resolving that challenge.