Employers should provide employees with more guidance on retirement savings because an overwhelming majority of employees say they want it, according to a new study by Northern Trust, a wealth advisory firm based in Chicago.
However, employers are expressing reluctance to provide specific retirement savings goals until their fiduciary duties are clearly outlined, says the survey. Northern Trust surveyed 1,007 employer-sponsored retirement plan participants and conducted interviews with 53 plan sponsors and consultants for the report, The Path Forward.
The results show 88 percent of participants strongly or somewhat favor their employers providing tools to help determine if they are saving the correct amount for retirement. Eighty percent believe employers should encourage employees to contribute to their retirement plan, and 84 percent support employers providing incentives to encourage contributions.
Seventy-two percent say employers should offer a viewpoint on contribution amounts and 80 percent say they would consider taking their employer’s advice.
According to Northern Trust, the issue is critical because more than 88 million U.S. employees now participate in 401(k) or similar defined contribution plans and the plans now hold more than $6.8 trillion in assets.
For their part, plan sponsors have reservations about taking a more active role in encouraging specific levels of saving and providing projections of retirement savings or income for participants, Northern Trust says.
“Plan sponsors generally agree it’s important to encourage saving for retirement,” says Jim Danaher, managing director of Defined Contribution Solutions at Northern Trust. “They have real concerns, however, about providing participants with targeted recommendations – by salary level or age – about how much they should be saving.”