As employers increasingly rely on defined contribution (DC) plans to support the retirement needs of their workforce, these plans are under renewed scrutiny as the primary provider of adequate retirement income. The 2012 Towers Watson survey of DC plan sponsors examines the main components of 401(k) plans and how they're successfully combined to support orderly workforce exits. The survey looks to understand how plan sponsors are handling issues such as design, fees, investments and communications to observe how employees are responding, and to assess where they will need to focus their efforts in order to achieve their goals and make DC plans a successful retirement vehicle.

Where are plan sponsors in achieving these goals, and what do employers need to do to make DC plans a primary resource for adequate retirement income — in short, to be certain that a DC plan can support an employee's "retirement readiness"? Access the full survey report to learn more about the findings of the research, including:

Key Findings:

  • Automatic enrollment and automatic escalation are helping to increase DC participation and deferral rates. Fifty-six percent of companies report a participation rate of 80% or higher, compared to 50% reporting these participation rates in 2010.
  • Employers report concern with retirement readiness but often make plan design decisions based on other factors. Seventy-four percent of employers report they offer their DC plan to provide adequate retirement income. But when asked for the top issues driving plan design, workers' ability to retire came in fifth.
  • Employer contributions are steadily increasing. About one-quarter (24%) of employers now make non-matching contributions. According to the five-year trends, 16% of respondents increased their matching contribution, and 5% increased their non-matching contributions.
  • The use of lifetime income distribution options is very low. Only 6% of respondents currently offer a lifetime income distribution option.