Press Release
Merrill Lynch Finds Plan Sponsors Concerned About Low Savings Rate And Retirement Plan Costs
New York, NY, June 24, 2002 — According to a Merrill Lynch poll of more than 100 companies at the firm's annual Retirement Group conference, the biggest concerns for plan sponsors include low employee savings rates and program or benefit costs.
Among respondents, 27% said the low savings rate was their biggest concern. Program costs were the top issue for 25% of plan sponsors and providing investment education or advice ranked third among the group, with a 20.5% response.
"It's clear that the current economic climate is driving concerns among retirement plan sponsors," noted Mark Feuer, chief operating officer of Merrill Lynch's Retirement Group. "What we need to stress is that employees will not be able to achieve retirement security on investment returns alone; savings rates need to be increased," he said. "Employers also want to help workers get the advice they need, but are concerned about the liability and cost issues involved in providing that advice through the retirement plan."
Plan sponsors said (63.3%) they felt the 401k plan would be the most important vehicle in helping employees achieve their retirement funding goals. Fewer than 7% cited Social Security as most important and only 5.6% thought after-tax personal savings would be most important. An overwhelming majority (57.4%) said employees should be encouraged to save for retirement through company match type funding of retirement plans.
On the subject of investment advice, a large number of respondents (40%) said they think education/advice is more important to their retirement plan participants than the number of investment choices available (28.7%) or the name recognition of the investment provider (27.6%).
When asked if they were considering broadening the education and advisory programs they offer, 46% of respondents said they would like to provide more, but are worried about liability. Almost 30% said they would, but did not think employees would be willing to pay for the advice. And, 23% said they saw no problems in offering advice as long as appropriate disclosures and limitations are provided.
"Proactive, targeted communication is one way of encouraging workers to save more," said Mr. Feuer. "Through current technology, we have the ability to identify and reach out to those workers who are not saving at all or are making plan contributions at a low rate, and communicate the benefits of increased savings."
The survey was conducted on 5 June at the annual Merrill Lynch Retirement Group conference, hosted in Chicago. The Merrill Lynch Retirement Group, a leader in retirement services for employers and individuals, is responsible for assets in excess of $307 billion for 5.6 million individuals and services over 16,000 workplace-based retirement programs.
Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 38 countries and total client assets of approximately $1.4 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets. For more information on Merrill Lynch, please visit www.ml.com.
###
401khelpcenter.com, LLC is not the author of this press release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this press release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
