The majority of employers think 401(k) plans are working generally and that subpar performance last year was the fault of the economy, not the basic structure of the system, according to a survey released today.
The majority of employers think 401(k) plans are working generally and that subpar performance last year was the fault of the economy, not the basic structure of the system, according to a survey released today.
According to the survey from The Charles Schwab Corp. of San Francisco, 9% of employers gave 401(k) plans an A grade because they thought the fundamental structure of the system was solid and did not require changes.
The 401(k) system received a B grade from 56% of employers, who said slight modifications were required in the 401(k) system.
Fully 32% awarded the plans a C grade, say that even though the system was working generally, they thought it could use a number of improvements. Only 3% of respondents said the system was not working and needed major changes or to be replaced.
Despite the negative returns that many retirement plans generated in last year’s market downturn, 51% of employers reported no change in their 401(k) participation rates.
In addition, those surveyed indicated that education and advice were more important to participants than they were in past years.
For instance, 80% said they believed that greater access to investment planning advice was more important for employees than a year ago. In fact, 25% of participants said they were already offering more individualized advice to employees, the report said.
Moreover, 66% believed that making financial education available in the workplace was more important for employees.
The online survey, conducted in March and April, was a collaboration between Schwab and CFO Research Services, the research unit of CFO Publishing Corp. of Boston. The survey polled 219 senior finance and human resources executives at firms with revenue of $100 million up to $10 billion.
