WINDSOR, Conn., March 2, 2017 – A new LIMRA Secure Retirement Institute study indicates 61 percent of U.S. workers without an employer-sponsored retirement savings plan would be more likely to save for retirement if they access to one. The majority of workers also feel that key features of the defined contribution (DC) system are important.
According to the Bureau of Labor Statistics, 46 percent of employers offer DC plans. Only 58 percent of civilian workers (62% of private-sector workers) have the opportunity to save for retirement via DC plan. Roughly 50 million workers have no access to work place retirement savings plans.
The research study, Workers and Retirement Programs: What Are They Thinking, also reveals that three quarters of workers want to save for retirement through their employer. In fact, 53 percent of workers feel that employers should be required to offer savings plans. Sixty percent of workers actually take it a step further and feel employers should contribute to the retirement savings accounts of their employees.
“Improving access to worksite retirement savings plans is a critical step in improving retirement security and opportunities for workers,” said Deb Dupont, associate managing director for LIMRA Secure Retirement Institute. “Workers who have the convenience of being able to save for retirement from a payroll deduction are more likely to save than those who don’t. Previous research showed that among those with access, 83 percent are regularly saving for retirement, while among those without access, only 21 percent are regularly saving for retirement,” continued Dupont.
Workers Value DC plans
LIMRA Secure Retirement Institute research shows that workers value many of the features available in defined contribution (DC) plans. Ninety-one percent of surveyed workers say it is important to know their retirement plan investments have been made with their best interests in consideration. The research also showed that workers valued investment variety. Nearly nine out of 10 workers surveyed felt that investment choice is important in a retirement program.
“While simple payroll deduction programs to an individual retirement account (IRA) are a start, as we’ve heard from surveyed workers, it may not be enough,” said Dupont. “Eighty-six percent of workers want to have the ability to contribute more than $5,000 a year towards their retirement, and IRAs cap contributions at $5,500, only slightly more than the figure we named. In 2016, the maximum contribution limit for IRAs and Roth IRAs was less than a third of the DC plan contribution limit,” she explained. “DC plans have the structure to meet the needs and desires of the modern-day worker.”
America Saves Week ® is February 27 thru March 4. Retirement savings is an essential part of saving for the future and employer plans are a great way to start. Institute research finds 60 percent of U.S. workers think the government should require employers to offer retirement savings plans.
These results are based off an online survey of 2,498 full- and part-time workers in June 2016.
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LIMRA Secure Retirement Institute provides comprehensive, unbiased research and education about all aspects within the retirement industry to improve retirement readiness and promote retirement security. For more information, please visit www.secureretirementinstitute.com.