Kansas City, Kan.— With Social Security now projected to reach insolvency sooner than expected, Americans are looking to their employers for aid in providing the financial security they’ll need during their golden years. The Benefits USA 2010/2011 survey results found 98.8 percent of companies offer a retirement plan to their employees. Of the types of plans offered, defined contribution plans are the most prevalent as they are used by 61.1 percent of organizations surveyed.
Under a defined contribution plan, an employer and employee may make contributions to an account to be used for the employee’s retirement. Nearly 70 percent of employees are enrolled in defined contribution plans, which include 401(k), 403(b) and 457(b) or (f) plans. In addition, most organizations require employees work an average of 3.2 years to be fully vested in the plan and receive 100 percent of the employer’s contribution.
“Though retirement plan values suffered at the height of the recession, they remain a prominent part of companies’ compensation packages,” said Amy Kaminski, director of marketing for Compdata Surveys, the nation’s leading compensation and benefits survey data provider. “Employers understand the ability to plan for the future is an important benefit to their employees, especially during times of uncertainty.”
To determine the employer contribution into these plans, most companies opt to use a standard matching formula. The amounts companies are willing to match, however, has changed over the last several years. In 2005, companies matched an average of 47.4 percent of employees’ contributions, up to 6.5 percent of their pay. By 2007, the average company match increased to 50.4 percent, but the average salary maximum employers would match up to decreased to 5.8 percent. In 2010, companies reported matching 65.3 percent of employees’ salaries, up to 5.1 percent of their annual salary.
Differences can also be found by industry, as seen in companies who match contributions based on a fixed percentage of an employee’s salary. Not-for-profit organizations matching based on this method contribute the most, 6.9 percent of employees’ pay. Companies in utilities follow at 6.6 percent, compared to services at 5.2 percent. Hospitality employers contribute the least, 3.3 percent of their employees’ salaries.
About the Survey
Benefits USA 2010/2011 analyzes national and regional data on benefits eligibility and administration policies with detailed information on benefit plans, premiums and provisions. Information was collected from nearly 4,500 benefit plans covering over 6 million employees across the country.
Compdata Surveys is the nation’s leading compensation and benefits survey data provider. Thousands of U.S. organizations provide data each year ensuring the reliability of our results. Compdata Surveys has been providing comprehensive data at affordable prices to organizations from coast to coast since 1988. For further information about their compensation and benefits surveys, contact Michelle Willis at (800) 300-9570.
This press release was distributed through PR Web by Human Resources Marketer (HR Marketer: www.HRmarketer.com) on behalf of the company listed above.