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SHRM Study Finds Nuanced Changes in Retirement Benefits

Employer-provided retirement benefits in general are holding steady, according to the Society of Human Resource Management (SHRM). In “2016 Employee Benefits: Looking Back at 20 Years of Employee Benefits Offerings in the U.S.,” SHRM reports that some aspects of employer-provided retirement benefits have grown in the last one to four years, while others have declined slightly and many have held steady.

Holding Steady

Retirement savings and planning benefits increased for 22% of the employers served by the nearly 3,500 HR professionals who responded to SHRM’s survey, and decreased for 24% of them. Furthermore:


  • the percentage of employers offering retirement preparation-specific planning advice stood at 45% — the same percentage as 20 years ago;

  • among the broad categories of employee benefits, retirement and savings benefits remained the third highest employee compensation expense;

  • 401(k) or similar defined contribution plans have continued to be the retirement benefit employers offer most frequently, with the percentage offering it holding at 90%; and

  • nearly three-quarters provide an employer match of employees’ 401(k) or similar DC plan contribution, as they have since 2014.


Even newer retirement benefit offerings show relative stability. Automatic escalation of salary deferral amounts for DC plans has held at approximately 20% since 2012. And DC plan debit cards have been an offering of 2% of the employers reflected in the survey for every year since 2012 (with the exception of 2015, when 3% made them available).

And second verse, same as the first regarding the popularity of DC plans versus DB plans. For the third consecutive year, the whopping 77-percentage-point disparity it began to report in 2014 between the percentage of employers offering them — 90% and 13%, respectively — held steady.

Hardship Withdrawals, Loans Down

According to the study, 71% of employer-provided plans made it possible for employees to take hardship withdrawals from their DC plans in 2013. That fell to 67% last year, and the slide continues — 60% of employers did so this year. The drop was much more dramatic for plan loans, whose availability fell by one-third, from 66% of employers to 44% of employers, between 2012 and 2016.

Roth 401(k)s

Roth 401(k) savings plans have become much more widespread, the study found: In 2012, 34% of employers offered them; in 2016, a majority do (51%). And while the report says that formal phased retirement programs decreased in the last year, informal phased retirement programs have proliferated since 2012.

Got a Match?

Employer matching contributions to Roth 401(k)s or similar DC plans debuted in SHRM’s research in 2014, when 30% reported they offered them. The number of employers doing so continues to increase, amounting to 37% this year.

Reenrollment

Reenrollment — automatically enrolling current employees under the same terms as new employees — began to appear in the study this year, debuting at 21% of the firms served by the HR professionals who responded to this year's survey.

Retirement Advice Trands

The study showed a wide range of results concerning retirement-related advice:


  • Advice offered online is down slightly; 55% of employers made it available in 2012, and half do so now.

  • Retirement advice offered to a group or in a classroom is made available by 41%, the same level as in 2012.

  • Availability of retirement-related advice offered one-on-one is growing slightly, and stands at 47%, up from 44% in 2012.

  • Retirement-preparation specific planning advice grew twice as much as one-on-one advice, rising from 39% in 2012 to 45% in 2016.


Coming on the cusp of implementation of the Department of Labor’s fiduciary rule, the results concerning advice are especially interesting. Will those numbers go down in next year’s survey?

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