The COVID-19 pandemic has impacted nearly every aspect of daily life, including the ability to save for retirement. However, employers have an opportunity to step up and support workers during this challenging time.
In its latest Retirement Security Survey , Des Moines, Iowa-based insurance company Principal found that 77% of employers said they’re providing their workers with enough education and resources to plan for retirement.
In spite of those efforts, though, only 31% of employers are confident their workers have made adequate preparations for life after work.
Companies’ retirement offerings keep the business’s priorities top of mind
As the pandemic rages on, many employers are concerned about how the crisis will affect workers. In fact, 57% of employers said they want to make retirement income options available to plan participants (many also want to extend their commitment to the retirement offerings they provide to employees, by encouraging plan participation — 39% — and/or expressing a desire for the plan to be used by as many employees as possible — 37%).
Their top reasons for doing so include:
- Encouraging employees to save for retirement (74%)
- Helping provide their employees with financial security in retirement (70%)
- Helping to keep their current employees (60%)
- Helping employees have enough retirement income to live comfortably (60%)
However, these sentiments aren't always brought to the decision-making table.
Principal found that only 50% of employers consider meeting the needs of their employees a priority when making benefit decisions, and an even smaller percentage — 20% — take employee demographics into consideration.
Instead, their highest priorities include:
- The cost to the organization (64%)
- A financial professional or consultant’s advice (62%)
- Adherence to legal requirements (59%)
Employees could benefit from additional support in retirement planning
More than 4 in 10 employers (44%) aren’t confident their employees’ retirement savings will last.
Other surveys paint a similar picture. Findings from asset management company Schroders indicated that only 26% of Americans at or near retirement age (60 to 67) have enough money to retire. Meanwhile, another report revealed that 58% of consumers have borrowed or withdrawn money from their retirement accounts during the pandemic, with many using it for living expenses or medical bills.
The results from Principal's Retirement Security Survey also showed areas of improvement for employers, as well as additional ways to support their workers as they plan for retirement.
Almost 6 in 10 employers (58%) don't encourage employees to retire at a certain age, while 33% don't offer assistance resources for their workforce as they transition into retirement.
Principal also found that nearly half of employees (49%) either don't understand retirement income strategies or have not yet chosen their approach. Despite that, 70% of employee respondents have indicated interest in retirement plans that offer a guaranteed lifetime income solution.
Methodology: Principal conducted an online survey of 160 retirement plan sponsors between Jan. 29 and Feb. 9, 2021. Respondents needed to be key decision-makers or day-to-day contacts.