Workers may be in for a treat – some companies plan to boost their retirement benefits in the next few years, as they look to hire and retain talent, according to a new survey.
U.S. employers are improving their defined-contribution plans, such as the 401(k) plan, according to a Willis Towers Watson survey of 363 companies that together employ more than eight million people across numerous industries.
The survey results come as employers are grappling with a tight employment market and struggling to hire people. Job openings in the U.S. outnumbered available workers, according to Labor Department data released earlier this month.
Three out of four employers said they’ve already made a change to their retirement plans in the last two years and expect to make another one in the coming two years. Another 14% said they didn’t make a change yet but are planning to.
Almost four out of 10 respondents said the changes would involve contributions themselves, such as allowing employees to make contributions to reduce student loans or build an emergency or health savings fund. More than a quarter of companies said they’d change their plans’ automatic deferral options, which is how employees can directly contribute to their accounts.
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Employee experience will also be top priority for employers. Almost all companies said they offer or plan to offer access to personalized support or digital tools to assist in financial wellness, such as budgeting and spending.
Retirement benefits are a significant draw for employees. Companies should see this as “a golden opportunity” to use these types of benefits to attract and retain talent, Dave Amendola, senior director of retirement at Willis Towers Watson, said in a statement. Workers consider retirement benefits a fundamental part of why they join or stay with a company, he said, “and want more help from their employer with planning for a financially secure retirement.”
For many workers, the pandemic temporarily affected retirement benefits. In response to the coronavirus crisis some employers suspended their 401(k) matches, but by the end of 2020, companies were already restoring those matches.
More than half of the survey’s respondents said they expect to have attraction and retention issues over the next two years, and one-third said their defined-contribution plans would be a tool for retention.