Employers plan to cut more retirement perks amid recession

The number of employers offering, and planning to offer, retirement perks to new employees has fell in response to the recession, according to a recent survey by Hewitt Associates.

Instead of offering premium retirement features, including automatic enrollment and company matches, the survey found that employers are more focused on offering lower-cost strategies, such as automatic rebalancing and target-date funds.

Hewitt’s annual survey of about 150 mid- to large-sized employers revealed that half (51%) currently offer automatic enrollment, up from 44% in 2008.

Among the companies that don’t currently offer automatic enrollment, just 25% are likely to add it for new hires, down from 57% in 2008.

The top reason for not offering automatic enrollment is because of the high cost of the employer match. According to the survey, only 2% of employers have cut or temporarily suspended 401(k) company matches since the recession began, about 5% plan to do the same this year.

Depending on where our economy stands in the next 12 to 18 months, Hewitt predicts that about 10% of companies will also cut or suspend 401(k) matches.

Has the economy forced your business to cut back on employee retirement perks? What lower-cost strategies are you using instead?

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