Survey Says Employers Preserving Benefits

August 19, 2009

The annual Transamerica Retirement Survey reports that while nearly half of the U.S. employers surveyed have undertaken cost-cutting measures such as lay-offs and salary freezes, relatively few have reduced or eliminated retirement benefits during this current economic downturn.

The survey was conducted with a nationally-representative sample of 596 employers, between January and February of 2009.

When asked what cost-cutting measures their company had implemented in the past 12 months, only 10 percent of employers surveyed indicated they reduced or eliminated retirement benefits. This pales in comparison to 39 percent that had implemented layoffs or downsizing, 23 percent that reported frozen salaries, and 20 percent that eliminated bonuses.

The reluctance of employers to reduce retirement benefits is supported by additional findings that most employers (81 percent) agree that their employees view a 401(k) or similar plan as an important benefit, and that most employers (79 percent) who offer a 401(k) or similar employee-funded retirement plan also believe that it is important for attracting and retaining employees.

“With so many employers having to take the unfortunate step of layoffs as a cost-cutting measure, it is encouraging that so many are still committed to preserving current levels of retirement benefits for the employees they are able to retain,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Our survey findings underscore the importance of employer-sponsored retirement plans in the workplace from both the worker and employer perspectives.”

The overall percentage of employers that made any change to their retirement plans in the last 12 months (24 percent) remained consistent with past surveys. The most notable difference from the previous survey, conducted between October and November of 2007, was a decline in the percentage of employers making changes to their investment lineup (9 percent in 2009 vs. 14 percent in 2007).

The percentage of employers offering a match fell slightly from 80 percent to 76 percent, with the most pronounced decline among large companies with 500 or more employees (78 percent in 2009 vs. 87 percent in 2007). This year’s survey found that fewer than 5 percent of employers decreased their company match in the last 12 months compared to 2 percent who reported doing so in the 2007 survey.

Only 21 percent of the employers surveyed offer a company-funded defined benefit pension plan. Among them, 85 percent are not considering any changes to it within the next 12 months and 9 percent are not sure.

Looking into the future, relatively few employers indicate they are considering making changes to their retirement plans in the next 12 months. Eighty-three percent of employers now say they are not planning any changes in the next year, while 11 percent indicate they are considering some form of change. The vast majority (95 percent) of employers that offer a 401(k) or similar plan agreed that they are satisfied with their retirement plan provider.

The Transamerica Center for Retirement Studies is a non-profit foundation supported by the Transamerica Life Insurance Co. and its affiliates.

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