A new survey shows backing for 401(k) plans by senior finance and human resources executives, even though many of the plans have performed poorly during the financial crisis.
The survey, by Charles Schwab and CFO Research, showed that 56 percent of the 219 senior executives polled gave the current 401(k) system a B grade. However, 80 percent said that greater access to 401(k) investment planning advice is more important for employees now than it was a year ago. Sixty-six percent believe that making broader financial education available in the workplace is more important for employees now than a year ago.
Despite negative performance, 51 percent of executives report no change in their 401(k) plan participation rate. However, 63 percent admitted that employee concerns over personal finances are creating a more difficult work environment.
According to the study, 88 percent of the executives report that employees within five years of retirement are very concerned about the adequacy of their retirement planning, while 58 percent of respondents believe that employees losing confidence in the 401(k) plan is one of the most significant challenges their company will face in the coming year relative to retirement planning.
Executives recognize that their employees are more anxious about their retirement prospects, and not surprisingly, that apprehension is felt more deeply by those who are closer to retirement, noted Steve Anderson, head of retirement plan services at Charles Schwab. But what we have found both in this study and through our interactions with companies as a retirement plan provider is that today, employers are more prepared and more committed to playing a lead role in providing people with access to financial education.
When asked about the importance of different 401(k) plan features, 87 percent of employers say that offering 401(k) investment advice was important to their company's retirement plan second in importance only to offering a company matching contribution (96 percent). In addition, 57 percent of respondents report that employee requests for 401(k) advice have increased since September 2008, and 39 percent say that employee requests for broader financial education, such as budgeting and debt management, have increased during the same time period.
