Matching Employer Views and Action on Retirement Security
The notion that people need to save more for retirement is not new. Recent research suggests that in sentiment many employers agree, but may not put that in practice as fully as they could.
Transamerica Center for Retirement Studies (TCRS) recently released “All About Retirement: An Employer Survey,” which conveys the results of its interviews with more than 1,800 for-profit employers with five or more employees to glean their views on employees’ retirement. It conducted the interviews as part of its 17th Annual Retirement Survey. It also identifies ways in which they can help address that situation.
Transamerica found strong sentiment among the employers that there is a need to do more: 69% responded that most of their employees could work to age 65 and still have resources insufficient to finance their retirement.
The interviews revealed four ways in which employers can help ameliorate that situation.
Be Friendly to Employees as They Age. TCRS President Catherine Collinson argues that the arrival of Generation Z — sometimes called the post-Millennials and the group born after them — into the workforce spells “an extraordinary opportunity” for employers to innovate and benefit from collaboration and communication. And a strong majority of the employers TCRS interviewed said they foster such an environment and are friendly to employees as they age.
However, the findings suggest that in practice they may not embrace Collinson’s vision as fully as they report. The most common reasons they said were behind retirement are predictable: age, financial ability, health, family responsibilities. But they also cited organizational changes, layoffs and firings, as well as buyouts and incentives to retire. And the likelihood of these other factors bring present increased with an employer’s size, says TCRS.
Enable Employees to Work Past Age 65. Collinson reports that once again, what they employers they interviewed said and what is actually happening are not necessarily congruent. Seventy-two percent said they believe many employees expect to work beyond age 65 or not retire at all; 77% contend that many employees will work full- or part-time after they retire; and 80% said they support employees working beyond age 65. However, Collinson points out, the Department of Labor’s Bureau of Labor Statistics says that in 2016, just 25% of Americans age 65-74 were employed.
Adopt a Flexible Retirement Program. So far, TCRS reports, just under 40% of employers offer flexible schedules to pre-retirees; 31% enable pre-retirees to transition from full-time to part-time; and 27% encourage pre-retirees to participate in succession planning, training and mentoring.
Enhance Retirement and Employee Benefits. Overall, 66% of employers offer retirement benefits. However, TCRS says, fewer offer options that could further bolster retirement readiness. Just over half off Roth 401(k)s; 47% make part-timers eligible to participate in their retirement plans; and overall, 21% have adopted automatic enrollment.
Collinson calls for more employer involvement. Said Collinson in a press release about the interviews, “Employers play a vital role in promoting retirement security among American workers, yet it’s important to keep in perspective that their primary focus is running a business. Therefore, it is imperative that policymakers and the retirement industry work together to make it as easy, affordable and worry-free as possible for employers to offer retirement plans along with other employee benefits and flexible retirement options to their employees.”