The most efficient solution for plan participants is a professionally managed risk adjusted globally diversified portfolio. This portfolio is best when it is automatically assigned based on age. Each employee can then determine the correct level of risk for their particular circumstance and make a change to the appropriate portfolio.. The final alternative would be allowing the employee to opt out of the managed portfolio and choose their own fund mix. I believe most employees will stay within the model portfolios and will experience better results with less anxiety.

The findings from the survey emphasize four areas of focus for employers and their participants: attitudes toward saving for retirement, awareness of automatic features in DC plans, awareness of long-term investment risks and nuances among age groups that impact likeliness to save.”Plan participants communicated loud and clear about what they need: simple steps and automated features,” said Kristi Mitchem, senior managing director and head of Global Defined Contribution for SSgA. “One of the most surprising and encouraging findings is the willingness of participants to take 401k direction from their employers. The ongoing volatility in the financial markets has increased anxiety amongst plan participants and a significant percentage want simplified and prescriptive guidance in order to make progress toward their retirement goals.”

Attitudes towards saving are changing, with 75 percent of survey respondents indicating they would be willing to be automatically enrolled in a 10 percent savings “boot camp” for six months. The survey concluded that 54 percent of participants say they are “very” or “somewhat confident” that their savings are on track to fund their planned retirement lifestyle. Other participants have a much less optimistic outlook. Most place the blame on themselves, with 55 percent indicating they lack confidence because their rate of savings is not high enough and 52 percent indicating they did not start saving early enough. Others blame the economy or the financial markets, and only a few blame their employer.

Plan sponsors(employers) will benefit from providing the proper guidance to their employees. If provided with a pension fund like plan stress and anxiety levels will drop. The result will be a more productive work force as well as their retirement plan viewed as a real employee benefit.

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