LINCOLNSHIRE, Ill., Jan. 21, 2015 /PRNewswire/ -- To improve the long-term financial outlook for workers, a new survey from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), reveals that the majority of companies now offer automatic features in their 401(k) plans to ensure that workers are saving enough to receive full company matching contributions over time.
According to Aon Hewitt's survey of approximately 100 companies with defined contribution (DC) plans, 29 percent of employers automatically enroll participants in the plan at a savings rate that is at or above the company match threshold. Another 27 percent of employers automatically enroll individuals below the full match rate, but automatically escalate contributions over time so that workers will eventually be saving enough to receive the full company match.
"In the past, employers automatically enrolled workers into 401(k) plans at low rates and workers often wouldn't increase their contributions enough to reach the full company match—to the detriment of their retirement savings," explained Rob Austin, director of Retirement Research at Aon Hewitt. "Because many employers gauge the success of their plan by the number of workers saving enough to receive the full match, they understand that they need to give workers an added boost by either starting them off at a more robust savings rate or automatically escalating contributions over time up to, or beyond the match threshold. That extra savings can have a remarkable impact on workers' long-term savings outlook."
Aon Hewitt's survey also found:
8 percent of companies automatically enroll participants below the full match threshold and have contribution escalation as an opt-in feature
70 percent of companies responding to the survey have automatic enrollment
Among plans with automatic enrollment:
7 percent default above the full company match level
34 percent have default rates at the full company match level
59 percent default below the full company match level
Of companies that have not implemented automatic enrollment:
67 percent cite the increased cost of the match as the biggest barrier
37 percent are concerned about the reaction from employees
30 percent do not want small account balances in the plan
Click here to learn more about Aon Hewitt's pulse survey.
About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.
About Aon Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon's global partnership with Manchester United.