New Research From The Hartford Indicates Few Americans Fully Understand Their Employer's Retirement Savings Plan
One in three Americans say they have little or no understanding of
their retirement plan and three in four do not understand it completely;
findings underscore need for education
SIMSBURY, Conn., Sep 09, 2009 (BUSINESS WIRE) -- As Congress debates reforms for how Americans save for retirement, a new study shows that most workers do not understand their retirement savings plans as well as other employer-provided benefits, indicating an acute need for more education.
One in three (34 percent) Americans say they have little or no understanding of their retirement plan and three in four (74 percent) say they have less than a complete understanding, according to research from The Hartford Financial Services Group, Inc. (NYSE: HIG). Employees indicated they had a better understanding of other benefits provided through their employer, such as medical coverage and life insurance.
"With millions of Americans entering or approaching retirement within the next five to 10 years, it's critical that we understand how to make the most of our retirement benefits," said Jamie Ohl, senior vice president of The Hartford's Retirement Plans Group. "Although The Hartford places a high priority on educating retirement plan participants, there is more that we and the rest of the industry need to do to promote greater understanding and higher utilization of retirement plans."
The Hartford's research found differences in understanding by both gender and age. More men (75 percent) reported they needed little direction to understand their retirement benefits as compared to women (56 percent). Also, Generation X (ages 30-44) reported having the best understanding of their retirement plan, even higher than Baby Boomers (ages 45-65) who are chronologically closer to retirement.
Employers have a tremendous opportunity to help employees understand their retirement savings benefits and to encourage them take action to prepare for retirement, according to Ohl. The survey showed several factors that influence employee decisions when it comes to selecting employee benefits, including retirement plans, she said.
Employers carry the most weight, with one in five (19 percent) plan participants saying they look to their place of employment for guidance on retirement savings matters. Other key influencers were financial advisors (15 percent), spouses (13 percent), immediate family (12 percent), the Internet (9 percent) and program providers (7 percent), according to the survey results.
Age and gender also influenced who plan participants turned to for advice. Women trusted immediate family members and spouses more than men did, while men were more likely than women to gravitate to the Internet as a source of information. Employers ranked as the top influencer for Baby Boomers and Gen Xers while Generation Y (ages 18-29) - the youngest group polled - was most likely to be influenced by their immediate family.
"The Hartford has taken note of the influence that employers carry when it comes to employees making decisions about retirement and we therefore work closely with employers to provide the right tools to help educate their employees," Ohl said.
The Hartford conducts periodic national conference calls with plan sponsors to inform them about best practices in managing retirement plans, according to Ohl. These include primers on meeting fiduciary obligations, the need for periodic plan reviews, effective participant communication and education strategies, and other timely, topical information.
"Our educational initiatives take into account that employee populations comprise differences in generations, learning styles and financial objectives," she pointed out. "We emphasize the creation of simple, easy-to-understand educational materials that can be delivered in person, in print and online. Additionally, we stress the value of obtaining regular assistance from financial professionals and the need to put retirement savings objectives in context with each employee's overall financial objectives."
Earlier this year, The Hartford won five 2009 Eddy Awards for excellence in developing effective educational programs for retirement plan participants. The Hartford also deploys a battalion of retirement specialists to conduct enrollment meetings, educate employees on the need to save for retirement, and explain strategies for accumulating retirement assets.
"When we asked people what would most help them understand their employer-provided benefits, the top two answers were providing simple materials (36 percent) and having access to one-on-one support (22 percent)," Ohl said. "We also encourage retirement plan participants to work with professional financial advisors to design comprehensive financial strategies to meet their long-term financial goals. There is no substitute for understanding the basic concepts of financial planning and getting professional financial assistance."
The survey, conducted by Opinauri in April 2009, was conducted online and polled 1,019 U.S. adults age 18-64. The survey has a margin of error of 3.5 percent.
About The Hartford
Celebrating nearly 200 years, The Hartford (NYSE: HIG) is an insurance-based financial services company that serves households, businesses and employees by helping to protect their assets and income from risks, and by managing wealth and retirement needs. A Fortune 500 company, The Hartford is recognized widely for its service expertise and as one of the world's most ethical companies. More information on the company and its financial performance is available at www.thehartford.com.
HIG-L
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2008 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
SOURCE: The Hartford
The Hartford
David Potter, 860-843-8993
David.potter@hartfordlife.com
or
Timothy Benedict, 860-843-5150
Timothy.benedict@hartfordlife.com
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