It’s no secret that many Americans are anxious about having a financially secure retirement.
Much of that anxiety reflects a shift from pensions toward 401(k) plans as the standard retirement benefit offered by employers over the past few decades. While companies have no plans to bring back pensions, they are increasingly looking for better ways to help workers prepare for their retirements.
“With more workers falling short of their retirement savings needs, employers are being more aggressive about making plan design changes that will help workers close the savings gap,” Rob Austin, director of retirement research at Aon Hewitt, said in a statement. “While these tweaks to the plan may seem small, they can have a profound impact on workers’ ultimate retirement wealth.”
Here are three ways companies are changing their retirement benefits to help workers save more, according to a new analysis by Aon Hewitt.
1. They’re upping their match. More than 40 percent of companies now match worker contributions dollar-for-dollar, up to a certain limit. That’s up from less than a third of companies in 2013, when it was more common for employers to contribute $0.50 per employee dollar.
2. They’re setting a higher auto-enrollment contribution amount. More than half of companies now automatically enroll workers at a savings rate of 4 percent or more, compared to 39 percent of companies in 2013. More than half of companies have the default level at or above the company-match threshold.
3. They’re increasingly “back-sweeping.” A growing number of companies automatically enroll all eligible employees (rather than just new hires) in the company 401(k). This year, 16 percent of companies practice back-sweeping, twice the percentage that did so two years ago.