A newly published LIMRA Secure Retirement Institute report finds 98 percent of U.S. employers who offer a defined contribution (DC) plan believe it is important to offer a DC plan to help their employees save for retirement; two-thirds believe it is very important. Employers who match employee contributions are significantly more likely to report “helping employees save for retirement” and “empowering employees” to do so are important reasons to offer the DC plan.
According to Bureau of Labor Statistics data, only 6 in 10 U.S. workers have access to a DC plan through their employers. However, close to three-quarters of those with access participate, suggesting most employees recognize the value of having an employer-sponsored retirement savings plan.
This is supported by separate LIMRA SRI research, in which American workers were asked what prompted them to begin saving for retirement. The top reason was plan access. Nearly 4 in 10 (39 percent) said they began to save for retirement because their employer offered a retirement savings plan. Another key incentive was matching contributions. More than a quarter of employees (27 percent) say they began saving for retirement because their employer offered a matching contribution.
From the employer’s perspective, LIMRA SRI research finds employers who offer a match are much more invested in helping their employees save for retirement. Ninety-four percent of employers who offer a matching contribution say they do so to help their employees save for retirement, compared with just 76 percent of those who do not offer a match.
Employee outcomes are top of mind for employers when they consider offering a DC plan. Eight in ten said their company feels a strong sense of responsibility to help employees meet their retirement savings goals. In addition, 84 percent say the positive outcomes associated with offering a retirement savings plan outweighed the potential downsides.
LIMRA research shows Americans’ top financial concern is affording a comfortable retirement. The first step is to systematically save throughout one’s career. Research shows access to a workplace savings plan is the most effective way to get people to start to save for retirement. Both employers and employees understand this.