Majority of companies do not measure retirement plan ...



Majority of companies do not measure retirement plan effectiveness, Wells Fargo study shows

Less than half of U.S. employers are taking steps to measure retirement plan success or measure whether employees are on track for retirement, according to recent research from financial services provider Wells Fargo. The 2011 Wells Fargo Retirement Plan Sponsor Survey found that 50 percent of companies have not measured their employees' progress, while 32 percent said that they are "analyzing plan participation, balances, and deferral rates."

Only 11 percent measured each employee's retirement income and compared it to expected needs; the majority (51 percent) do not provide employees with estimates of the annual retirement income they can expect based on plan balances. However, the survey found that when asked "what is your primary goal for plan management in 2012?", 63 percent of surveyed employers said that it is either to educate employees about how much to save and overall retirement needs or to increase employee savings.

"Employers care about their employees' ability to retire, but they are not taking enough steps to proactively assess if their employees have enough to retire," said Joe Ready, co-director of Wells Fargo Institutional Retirement and Trust. "Companies measure results all the time; they should treat this investment as they would any other corporate initiative and ask themselves if all the hard work and financial support is translating to better retirement readiness outcomes."

Biggest concerns. Plan sponsors continue to rate market volatility as the biggest concern (53 percent) among the various participant retirement risks, as shown in the general shift on the part of plan sponsors toward more conservative investments. Forty-two percent of employers surveyed said that they were concerned about participants not understanding retirement needs, and 40 percent were concerned about participants' ability to make savings last throughout retirement.

"The fact that plan sponsors worry more about market volatility as a threat to the retirement savings of their participants, rather than participants' lack of understanding retirement savings needs, suggests plan sponsors don't understand the root cause of the issue," said Laurie Nordquist, co-director of Wells Fargo Institutional Retirement and Trust. "Participants are better positioned to ride out market cycles when they have a retirement strategy and plan linked to their goals. Understanding the importance of saving enough money each month and allocating investments in a way that is appropriate for age and risk tolerance will help employees weather short-term market volatility."

Forty-eight percent of companies that sponsor 401(k) plans said the new requirements for fee disclosures to employees will "have little impact" on plan participants, while 49 percent said "participants will be confused." Only 5 percent say the requirements will lead participants to "make better investment choices," Wells Fargo noted.

The research includes responses from 450 companies. For more information, visit .

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