Good News, Challenges in Retirement Savings Report
There’s good news in a recent report on retirement saving and consumer attitudes toward it. But at the same time, it also provides fresh proof of changes in the retirement sphere as well as challenges to be faced.
Two reports by LIMRA, “For-Profit Sector Employees: 2016 Consumer Survey Update
” and “Not-for-Profit Sector Employees: 2016 Consumer Survey Update
” provide an interesting look at where these respective portions of the workforce are regarding retirement saving.
The reports are the latest documenting the fact that access to DC plans is more prevalent than is access to DB plans, and that participation in DC plans is greater. Among non-profit employees, just over one-third have access to a DB plan; access to DB plans among for-profit employees is about half that —16%. On the other hand, overall more than 80% of employees participate in employer-provided DC plans.
Drilling down, DC participation rates showed some slight variations among employees of:
- For-profit employers with 100-2,499 employees: 89%
- Government employers: 88%
- For-profit employers with 2,500 employees or more: 83%
- Non-profit employees: 82%
- For-profit employers with fewer than 100 employees: 80%
Employer matches have taken hold and are widespread, LIMRA indicates. Least likely to provide them were the education sector and for-profit employers with fewer than 100 employees; nonetheless, a healthy majority in both categories offer an employer match — just under 70%. More than three-quarters of the rest of the employer categories studied provide matches. Most likely are for-profit employers with more than 2,500 employees; 85% do so.
The studies found that there is more work do to in educating employees and giving them confidence in themselves about saving for retirement. More than one-third of for-profit employees and 40% of non-profit employees say they not knowledgeable about financial products or investment.
And the employees LIMRA studied evince lack of confidence: More than 40% of non-profit employees are unsure they will be able to fully finance their retirement, and more than half of employees in the for-profit sector share that view.