Nearly Half of Large Plan Sponsors Tracking Retirement Readiness

Large plan sponsors, those managing assets of $100 million or more, are increasingly looking to help their employees through their retirement years, T. Rowe Price found in a telephone and online survey of 269 executives late last year.

Ninety-nine percent believe they have a responsibility to help their employees prepare for retirement, and 41% say that helping retirees manage income from their 401(k) is a major strategic goal for their plan. Fifty-two percent are allowing terminated employees to take partial withdrawals from their plan.

Nearly half, 48%, are tracking the retirement preparedness of their employees. This proactive group is also more likely to use auto escalation of deferral rates (63% versus 52% of those not tracking retirement preparedness) and re-enrollment (55% versus 41%).

“Plan sponsors’ behaviors and attitudes clearly indicate the seriousness with which they take responsibility for the retirement security of their plan participants,” says Ann Coveney, senior manager of retirement thought leadership at T. Rowe Price. “More than a savings plan during working years, the 401(k) is increasingly seen as a plan that needs to serve employees during their retirement.”

Among those tracking employees’ retirement preparedness, 52% indicate that metric was provided by their recordkeeper, 25% report using a proprietary metric they developed on their own, and 21% sourced the metric from their consultant or adviser.

Nearly two-thirds (64%) feel better about 401(k) participant retirement preparedness compared with two years ago. But the third-ranked major 401(k) plan goal is enabling employees to retire at their preferred retirement date, which was indicated by 64% of sponsors. T. Rowe Price says this is a clear indication that employers are looking ahead to workplace management so that their employees will be able to retire in a timely fashion and younger employees will be able to be promoted.