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Employee retirement planning assistance lacking.

A William M. Mercer Inc. survey of 167 large and midsized companies found that only 44% offered employees retirement investment education programs for their 401(k) and other defined contribution plans, even though employees were required to act as their own pension managers for such plans. Education programs typically use group meetings, printed materials, individual counseling or videos to help employees understand investment choices and set funding goals.

Many of the companies that offered education programs, however, were not satisfied with them because they failed to motivate employees to save enough for retirement. Only 16% were fully satisfied with their education programs, 63% were somewhat satisfied and 21% were not very satisfied.

Close to three-quarters (72%) of respondents said nonmanagerial employees and 16% said managers did not understand how much they needed to save for retirement.

Michael J. Fitzpatrick, a partner of Ernst & Young, New York, agreed that plan participants generally were uninformed about investment options. He said, "One of the chief concerns of a plan administrator is to bring in an investment manager who can provide needed information without trying to sell a particular product."

Salvatore J. Armao, a partner of Biscotti, Grassi & Co., Valley Stream, New York, said another problem was that many younger employees had little desire to save for retirement. "Young parents or recently married couples are more concerned with saving for a house or car," he observed. "Retirement is the last thing on their minds."
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Article Details
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Oct 1, 1993
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