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MINNEAPOLIS — There’s even more evidence of the trend away from pension plans in favor of 401(k) plans. Employers’ greatest concern continues to be that employees are not saving adequately for retirement as many of them come up with ways to make their 401(k) plans more innovative, according to a survey from Wells Fargo. The 2006 Best Practices in Retirement Plans Survey surveyed more than 450 employers of all sizes with a concentration among private employers with between 500 and 10,000 employees. The survey found that 93% of respondents sponsor a 401(k) or other similar plan, and four out of five employers view it as the primary vehicle for their employees’ retirement security. One-third of respondents provide a defined benefit or traditional pension plan to their employees. That figure is likely to decline as one in five companies with such a plan report they plan to close it to new employees, 14% plan to replace their pension plan with a 401(k) or similar plan, 13% plan to freeze current benefits in the pension plan and 5% plan to terminate their pension plan within the next 12 months. Employers’ greatest concern about the retirement plans they offer is that their employees are not saving enough for retirement, cited by 43% of respondents. Employers are reacting to their concerns about workers’ lack of retirement readiness by adding features to their 401(k) plans designed to get more employees on track financially for retirement. For instance: o Automatic Enrollment. Twenty-six percent report automatically enrolling workers in 401(k) plans, and 10% plan to add that feature in the next year. o Target Funds. Nearly half of all companies in the survey (48%) offer target date or target risk funds, which are investment options managed to a particular risk tolerance and/or retirement date. o Managed Accounts and Advice. Many employees are looking to receive more hands-on advice about how to invest for retirement. Employers are responding to these requests with 69% already providing some form of investment advising or education resource to employees. o Roth 401(k) Contributions. Only 3% of survey respondents currently offer a Roth 401(k) contributions feature, but 16% plan to add such a feature within the next 12 months. “Clearly, employers expect workers to accept greater responsibility for their long-term financial security,” said Laurie Nordquist, head of Wells Fargo Institutional Trust Services. “The good news, though, is that employers are trying to help their employees achieve their retirement goals through innovative retirement plan design. These efforts, along with the recently signed into law Pension Protection Act, are creating the next generation of 401(k) plans, which have the potential to help many more Americans save adequately for retirement.” Of the one-third of survey respondents that offer a defined benefit pension plan, the employers’ greatest concern was the increasing cost of providing retirement plans (43%). “The costs of pension plans, particularly the variable nature of the costs, is weighing on the minds of employers that offer pension plans, and the survey shows that employers are taking steps to make these expenses more predictable and manageable,” said Kathie Tange-duPr?, director of surveys and publications for Wells Fargo’s benefits consulting group, Bryan, Pendleton, Swats & McAllister (BPS&M), which conducted and analyzed the survey. The majority of employers with pension plans (76%) reported already taking some steps to better manage plan costs. These actions include one or more of the following top four strategies: changes in actuarial assumptions (45%); changes to portfolio mix (35%); strategic plan changes, including amendments or plan freezes (34%) and asset liability forecasts (30%). A frequent complaint employers have about their pension plans is that their employees do not appreciate the benefit the company is providing, according to the survey. However, most employers (72%) provide only a summary plan description about the pension plan to their employees. –[email protected]

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