Trendspotting

Information Overload
Workers don’t want too much fee info

When asked what level of detail they would like to receive about retirement plan fees, only 31% of workers surveyed said they prefer a highly detailed account of fees and expenses.

The survey, conducted by the Transamerica Center for Retirement Studies, found that more than two-thirds of the workers surveyed stated either a preference for some form of summary information (54%) or no preference (14%) for the level of fee detail they receive. Thirty-two percent of workers prefer the information to be somewhat summarized with a breakdown of fees for services and investments, while 22% prefer a high-level summary with a total, all-inclusive cost, according to a press release.

Seventy-five percent of survey respondents said they would prefer to receive information through an electronic format such as electronic quarterly account statements or through their plan provider’s Web site.

The majority of employers surveyed (92%) agree that the people responsible for overseeing the plan have a clear understanding of fees and expenses associated with their company’s 401(k) plan, with 48% who strongly agree. Most employers (73%) also believe that their employees have a clear understanding of 401(k) fees; however, only 29% of workers indicated they were aware of fees.

The survey found that workers who agree they are very involved in monitoring and managing their retirement savings are more than twice as likely to be aware of fees than those who are not very involved (35% verse 16%).

The 10th Annual Transamerica Retirement Survey was conducted online within the United States by Harris Interactive between December 16 and January 13, among 3,466 full-time and part-time workers.—Rebecca Moore

Sticking Around
Employers see retirement planning as retention tool

Research by the Center for Retirement Research at Boston College (CRR) suggests that employers with a large share of employees wanting to stay past the traditional retirement age are less likely to adopt an individualized retirement planning program.

In its latest Issue Brief, CRR says employers primarily view individual retirement planning as a tool for retaining, not retiring, employees. The researchers contend that this suggests that staffing issues, not a disruption of the employer’s retirement process, underlie their interest in this initiative.

CRR’s research also suggests that employers have been slow to recognize the personnel management implications of the shift away from traditional pension programs and are interested in retirement-related initiatives in order to attract and retain employees.

CRR says “the presence of a significant ‘retirement challenge’—either a large number of unprepared employees or a large number of employees wanting to stay on the job well past the traditional retirement age—has no significant effect on the encouragement of retirement saving.”

Employers said they were likely to increase their encouragement of retirement saving. On the likelihood scale from one to 10, the median response was an eight and nearly 30% responded 10.

However, two characteristics, the employer’s expected rate of employment growth and the size of the employer, have a statistically significant positive effect on the encouragement of retirement saving, according to the report. The strong association with expected employment growth indicates that employers see the encouragement of retirement saving as an “employee benefit” useful in attracting and retaining workers, the researchers contend.

Employers in the study generally are lukewarm about creating employment opportunities for even half the employees they expect will want to stay on the job two or more years past the traditional retirement age. According to the report, a need to attract and retain workers and the value employers see in older workers make them more receptive to creating opportunities for workers to stay past their traditional retirement age.

Employers that expect rapid employment growth and thus need to attract and retain more workers, and employers that have a relatively old workforce that soon could be depleted by retirements or that see older workers as making a positive contribution to the organization’s knowledge base, are more likely to create such opportunities. Not surprisingly, employers are less likely to do so if they view older workers as costly or if the older employees in question are rank-and-file as opposed to white-collar workers.

Having a relatively large number of employees wanting to stay on has no significant effect on the likelihood an employer would create opportunities for them. “Neither their employees’ need to work longer (the employees’ retirement challenge) nor potential disruptions to the retirement process (the employer’s retirement challenge) had any significant effect,” the report says. —Rebecca Moore

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