Data & Research October 22, 2015

Study Reveals Better DC Plan Designs

Aon Hewitt finds DC plan sponsors are beefing up plan features to improve participant outcomes.
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U.S. employers are taking steps to help workers save more and improve their long-term financial outlook, according to a survey from Aon Hewitt.

The survey of more than 360 employers, representing more than 10 million employees, found 42% of defined contribution (DC) plan sponsors match employee deferrals dollar for dollar, up from 31% in 2013. Before 2013, 50 cents per $1 was the most common formula.

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DC plan sponsors who automatically enroll new hires are defaulting employee contributions at a higher rate. Fifty-two percent automatically enroll workers at a savings rate of 4% or more, up from 39% of employers in 2013. Fifty-one percent default workers at or above the company match threshold, nearly 10 percentage points higher than in 2013.

Most plan sponsors only automatically enroll new hires, but many are taking action to ensure more workers participate in the plan. Currently, 16% of sponsors automatically enroll all eligible employees (also called “back-sweeping”) on an ongoing (annual) or one-time basis—double the percentage that did so in 2013.   

“With more workers falling short of their retirement savings needs, employers are being more aggressive about making plan design changes that will help workers close the savings gap,” says Rob Austin, director of Retirement Research at Aon Hewitt. “While these tweaks to the plan may seem small, they can have a profound impact on workers’ ultimate retirement wealth.”

Models from Aon Hewitt find increasing employer match to a dollar-for-dollar formula can boost participants’ savings by up to $85,000. Auto-enrolling at 6% can boost savings by up to $357,000 and automatically escalating employee deferrals can result in a $275,000-boost. More data is here.   

Aon Hewitt also found DC plan participation and account balances are at an all-time high, at an average 79% and $100,320, respectively. The average savings rate increased to 7.6%. More results from the 2015 Trends & Experience in DC Plans Survey are here.

Diversions October 22, 2015

Sit at Your Own Risk

Spending your entire workday sitting down can impair vascular health.
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Across the country, many employees sit at their desks for most of an eight-hour workday. As technology creates an increase in sedentary lifestyles, the impact of sitting on vascular health is a rising concern. To put it bluntly, sitting down for six straight hours impairs vascular function, according to researchers from the University of Missouri School of Medicine.

But there is good news: walking for just 10 minutes after a prolonged period of sitting can help restore vascular health.

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Researchers compared the vascular function of 11 healthy young men before and after a period of prolonged sitting. Findings indicated that blood flow in the popliteal—an artery in the lower leg—was greatly reduced after sitting at a desk for six hours.

Participants then took a short walk. Researchers found that 10 minutes of self-paced walking could restore the impaired vascular function and improve blood flow.

When you have decreased blood flow, the friction of the flowing blood on the artery wall, called shear stress, is also reduced. Moderate levels of shear stress are good for arterial health, whereas low levels of shear stress appear to be detrimental and reduce the ability of the artery to dilate. Dilation is a sign of vascular health. The more the artery can dilate and respond to stimuli, the healthier it is.

More research is needed to determine if repeated periods of reduced vascular function with prolonged sitting lead to long-term vascular complications, researchers added.

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