A new survey of small and mid-sized employers finds that two out of three plan sponsors believe the current 401(k) system is effective in helping employees achieve adequate retirement savings, despite recent reports that show employees are often ill-prepared for retirement and not saving enough.
"Employers think that the 401(k) platform can be a successful platform, but they also recognize that the savings rate needs to be higher and there are more things they can do through plan design," says Greg Burrows, senior vice president of retirement and investor services with the Principal Financial Group, which published the survey results Thursday. He says plan design can be the real key to increasing not only participation, but adequate savings rates. The 2011 Principal Financial Group Retirement Readiness Survey questioned 1,305 benefits professionals, some offered defined contribution plans and some did not.
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