This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Are Employers Withholding These Critical Features in 401(k) Plans?

By Hal M. Bundrick

NEW YORK ( MainStreet) -- Workers in other countries have better retirement plans and benefit from automatic retirement savings features that most Americans simply can't access in their 401(k) plans. But U.S. employers say the reason they don't offer automatic enrollment (27%) or automatic contribution escalation (30%) is because of a concern that employees wouldn't approve of these features, according to J.P. Morgan research.

"Employers see the need for change, but most need help in determining the best approach for their plan," said Catherine Peterson, Director of Retirement Insights at J.P. Morgan Asset Management. "The new generation of 401(k) plan components - from design to investments, communications and administration - is readily available and simply needs to be prioritized, coordinated and managed toward plan objectives and goals. There is a second generation 401(k) plan emerging and it shouldn't be reserved for large plan sponsors only." Deploying these advanced options for the benefit of employees would seem to be a priority for employers, 75% of whom say "increasing financial security" and "helping ensure employees have a financially secure retirement" is highly important. And 60% of plan sponsors say they have a somewhat high to very high sense of responsibility for the "overall financial wellness of employees."

And yet the automatic savings features remain unavailable to so many participants who are depending on their 401(k) plan to be an effective retirement savings tool.

Does the fault lie with advisors? Only 14% of plan sponsors say their advisor or consultant proactively suggests new ideas and shares best practices for evolving their plan.

But the responsibility is held by the plan sponsor and participants are counting on their employer to do what's best. Two thirds of respondents had a high level of trust in their employers' ability to select an appropriate retirement plan provider and set investment options. Only 20% were opposed to automatic savings features being offered in their 401(k) plans.

Still many plan sponsors continue to resist. The Plan Sponsor Council of America says that less than half of employers have adopted auto escalation and auto enrollment options.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TSLA $151.32 -6.90%
YHOO $26.85 -4.00%
AAPL $94.53 0.54%
FB $100.66 -3.30%
GOOG $678.08 -0.80%


Chart of I:DJI
DOW 15,905.63 -299.34 -1.85%
S&P 500 1,843.38 -36.67 -1.95%
NASDAQ 4,260.0340 -103.11 -2.36%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs