News, Analysis, and Research for the Retirement Planning Industry

A Difference Between “Focus” and “Actions”

In DC plans, Research on 2 November 2010 at 8:15 pm

The Hartford recently released some findings from their Retirement & Recession Study.  The press release refers to “a sharp, upward spike in the levels of understanding and participation in defined contribution plans” as evidenced by the increase in percentage of respondents that said they “completely” or “mostly” understood their retirement benefits from 65% in 2009, to 76% in 2010.

Though “nearly half” of respondents agreed that “retirement benefits are more important now than before the start of the recession”, there is little evidence that this increased understanding and appreciation has positively impacted participant saving decisions.  While DC plan participation rates increased 4% from 80% in 2009 to 84% in 2010, 22% of participants reduced or eliminated contributions.

This decision may have been influenced by the fact that 20% of participants were in plans where employer contributions were reduced or eliminated.  It would be interesting to learn how the 22% of participants that reduced/eliminated contributions fell between the employers that reduced/eliminated matching contributions and those that did not to see how employer actions might have impacted participant contribution and deferral rates.

One can certainly appreciate Hartford’s desire to report an “unexpected bright spot”, however while “more Americans say they are now focusing more on saving for retirement”, it appears that there is some disconnect between respondents’ “focus” and their “actions.”


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