New Haven Register
Published: Tuesday, June 23, 2009
Workers need more education on 401(k) plans, execs say
By Angela Carter, Register Staff
A majority of senior finance and human resource executives in American corporations say the 401(k) plan is an effective tool for saving for retirement, but they believe it could be improved by providing more financial education to workers.
According to the “Getting Retirement Savings Back on Track: Employer Views on the 401(k) and Financial Education in the Workplace,” study released Monday by Charles Schwab Corp. and CFO Research Services, 25 percent of executives surveyed are offering more individualized advice to employees in place of broader education campaigns.
Fifty-eight percent identify employee confidence as a challenge, the survey said, as workers try to cope with the portfolio losses they have suffered over the past year while meeting day-to-day expenses.
Employers have been taking steps to manage administrative costs of the plans, such as limiting automatic enrollment to those employees who meet a certain threshold for years of service or reducing or eliminating matching contributions.
“Executives recognize that their employees are more anxious about their retirement prospects, and not surprisingly, that apprehension is felt more deeply by those who are closer to retirement,” Steve Anderson, head of retirement plan services at Charles Schwab, said in a statement. Charles Schwab provides retirement planning and other financial services.
Peter Gioia, vice president and economist for the Connecticut Business & Industry Association, said the survey results reflect a sense in corporate America that the system is generally working and needs some modifications, but government intervention is not necessary.
Matthias Strilbyckij, a certified public accountant and partner who specializes in 401(k) audits with Konowitz, Kahn & Company, P.C. in North Haven, said that the firm is not seeing a trend in employers making changes to their matches, but employees are opting out of making contributions because of financial strains.
Ronald R. Milone, a partner specializing in financial planning at Konowitz, Kahn, said fewer private entities offer pensions and 401(k) enrollments are on the rise. “Over the last couple of years, many plans now have an automatic enrollment feature,” he said, adding that workers have the option not to participate. “I’ve seen participation in those plans go up. There’s very few alternatives left now for employees, at least in the workplace.”
Strilbyckij said plan participants should think long-term and not make rash decisions as they watch the market, particularly during declines.
Milone encouraged workers to take advantage of online tools or seminars provided by plan custodians. People also can take plan documents to financial planners or accountants for consultation.
Angela Carter can be reached at 789-5752 or acarter@nhregister.com.
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