The Economy's Latest Victim: Employee Retirement Savings, Says Aon Consulting
30 Settembre 2008 - 4:00PM
PR Newswire (US)
U.S. Employers Offer Retirement Planning Tools, but Employees Still
Not Actively Saving CHICAGO, Sept. 30 /PRNewswire-FirstCall/ --
Even though U.S. organizations provide various financial and
retirement planning tools to help their employees save adequately
for retirement, many employers say their workforce does not save or
fully understand how much income they will need at retirement,
according to Aon Consulting Worldwide, the global human capital
consulting organization of Aon Corporation (NYSE:AOC). (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) Aon
Consulting's 2008 Benefits & Talent Survey of more than 1,100
U.S. organizations found that 93 percent of employers offer defined
contribution plans (DC) to their employees and 92 percent of
employers contribute to the plan. However, about 40 percent of
organizations with DC plans have less than 70 percent of their
workforce participating in the plan. According to 67 percent of
employers, employees do not participate in the plan because they
cannot afford to make contributions. "In this sluggish economy,
which has seen record high gas and food prices and home foreclosure
rates, it's not surprising that employees may sacrifice retirement
plan contributions to fund other necessities," said Cecil
Hemingway, executive vice president and Aon Consulting's U.S.
Retirement Practice leader. "That said, employers should strive for
70 percent or higher employee participation rates. A mark of less
than 70 percent indicates a poor plan, poor communication, or both.
During this economy, employers should emphasize the financial
advantages of contributing to a 401(k) plan, such as being able to
reduce federal income taxes and receive employer matching
contributions," he added. Recognizing most employees will need on
average between 77 and 94 percent of their pre-retirement income to
maintain their current lifestyle in retirement(1), the 2008
Benefits & Talent Survey found employers provide the following
to help employees determine how much income they will need: -- 65
percent of employers offer Web-based retirement planning tools; --
56 percent provide retirement planning information they obtain from
their record-keeper, defined contribution consultant, or financial
planning partner; and/or, -- 36 percent provide personalized
retirement planning statements. Even with these resources
available, the survey found only 10 percent of employers believe
their employees understand to a great or very great extent the
percentage of pre-retirement income they will need to maintain
their current standard of living in retirement. Forty-six percent
of employers believe their employees only understand this to some
extent. In addition, 68 percent of employers who offer personalized
Web-based retirement planning tools estimate that less than half of
their participants used them in the past year. "Despite the
resources available, it is clear the message is not getting through
to employees," Hemingway said. "This survey confirms that it may
not be the form of communication or the tools provided but the
content being communicated. To motivate employees to save for their
future, communication and tools must be relevant and engaging, such
as taking personal information to calculate whether or not the
participant is on track for retirement and outlining a plan to help
them improve their savings," he said. The survey also found that
employers have built in features to the defined contribution plan
design to bolster employee retirement savings. For example, 92
percent of organizations offer some type of employer contribution,
with about one-third of employers offering a 3 percent contribution
for a 6 percent employee contribution. Thirty percent of employers
currently offer automatic enrollment and of those employers, 56
percent use a target date retirement fund as their default
investment fund. Almost 18 percent of employers use automatic
increases in defined contribution deferrals. "These features help
employees improve their accounts and at least save at the minimum
level, without much involvement from the participant," Hemingway
said. "I expect to see more employers implementing these features
in the future to help participants retire on time, and to help
reduce employer workforce management costs in the long run." About
Aon Consulting Aon Consulting Worldwide is among the top global
human capital consulting firms, with 2007 revenues of $1.352
billion and 6,335 professionals in 117 offices worldwide. Aon
Consulting is shaping the workplace of the future through benefits,
talent management and rewards strategies and solutions. Aon
Consulting was named the best employee benefit consulting firm by
the readers of Business Insurance magazine in 2006, 2007 and 2008.
For more information on Aon, please visit
http://www.aon.mediaroom.com/. About Aon Aon Corporation (NYSE:AOC)
is the leading global provider of risk management services,
insurance and reinsurance brokerage, human capital and management
consulting. Through its 36,000 colleagues worldwide, Aon readily
delivers distinctive client value via innovative and effective risk
management and workforce productivity solutions. Our
industry-leading global resources, technical expertise and industry
knowledge are delivered locally through more than 500 offices in
more than 120 countries. Aon was named the world's best broker by
Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked
highest on the Business Insurance ranking of the world's largest
insurance brokers based on commercial retail, wholesale,
reinsurance and personal lines brokerage revenues. Aon also was
ranked by A.M. Best as the number one insurance broker based on
brokerage revenues in 2007 and 2008, and was voted best insurance
intermediary, best reinsurance intermediary, and best employee
benefits consulting firm in 2007 and 2008 by the readers of
Business Insurance. For more information on Aon, log onto
http://www.aon.com/. (1) According to Aon Consulting's 2008
Replacement Ratio Study. For more information, contact: Sara
Carlson 312.381.5045
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Sara Carlson of Aon Corporation, +1-312-381-5045, Web site:
http://www.aon.com/
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