Dive Brief:

• Employees today are neither confident about when they can retire or about how their 401(k) plans operate, according to a new study.
• The study, from Betterment for Business and Forrester Consulting (which conducted the survey), found, among other things, that more than half of employees are uncertain that they will retire comfortably when they want to. While 62% of employees believe their employers aren’t legally responsible for ensuring that participants receive advice that reflects their best interests, employers actually do bear fiduciary responsibility.
• As for fees, employees don’t understand 401(k) fee structures, with about 60% expecting to pay less than 1% in 401(k) plan fees (when fees are often much higher), and finally, typical approaches to employee education also fall short, as annual information sessions offered by 401(k) plan managers were effective for only about 20% of the employees surveyed.

Dive Insight:

This study brings home the challenges associated with 401(k) and other defined contribution retirement plans, for both employee and plan sponsor/employer. After all, 401(k) plans are not going anywhere, yet they continue to be a rather misunderstood retirement planning option. With that, employers need to devote more attention to plan specifics and details to ensure fees make sense and employees have tools to help them feel confident about their retirement savings.

On the other hand, there has been some progress on certain savings strategies, and recent Department of Labor initiatives regarding fees are forcing employers to get more involved with 401(k) plans. Often, that means offering better technical tools in the form of online platforms and other technology-based options.