03-18-2011 04:18 PM CET - Business, Economy, Finances, Banking & Insurance

Nearly One-Third Of Employers To Restore Matching Contributions In 2011

Press release from: Carl Terzian Associates
PR Agency: Carl Terzian Associates

Los Angeles, March 17, 2011 – Despite high unemployment rates, signs of economic recovery are surfacing according to the 7th annual Retirement Plan Survey, conducted by Grant Thornton LLP, Drinker Biddle & Reath LLP and Plan Sponsor Advisors LLC. After significant cutbacks in employer matching contributions over the past few years, 30 percent are planning to reinstate previously eliminated or reduced matching contributions during 2011. Forty two percent do not have plans to reinstate their match this year.

It should be noted that when asked this question one year ago, over half (53%) of the employers had not decided whether to return to previous contribution levels and 33 percent had no plans to do so. This indicates a significant shift in plan sponsors’ outlook on matching contributions since a year ago.

Despite cutbacks by both plan sponsors and participants, 83 percent of plan sponsors reported that either very few or none of their employees had expressed concerns about their retirement readiness.

“Considering the issues facing participants, including reduced employer contributions, decreased plan balances, economic uncertainty and regulatory/administrative updates such as Roth conversions, participants may not be aware that they need to be concerned,” said Jennifer Flodin, Chief Operation Officer of Planned Sponsor Advisors LLC.

Emerging market equities emerge as the leading investment option
When it comes to choosing asset classes, plan sponsors are focused more than ever on emerging market (EM) Equities, with 77 percent of plans reporting inclusion or consideration for 2011. This marks a 30 percent increase since last year when EM was only included or under consideration by 46 percent of plan sponsors. Real estate investment options were second to EM with 53 percent, followed by global bonds at 48 percent.

“The common trait of many of these asset classes is the lack of correlation they share with the equity markets. Asset classes like commodities, real estate, emerging markets and global bonds can be valuable when incorporated into a diverse portfolio, creating a sum greater than the parts,” said Erica O’Malley, Grant Thornton’s national Employee Benefit Plan practice leader.

Other notable survey findings:
• Fifty-nine percent of plan sponsors responded that they have conducted one or more tax/legal compliance reviews on their plan in the past three years, an increase from 46 percent in last year’s survey.
• Fifty seven percent of plan sponsors surveyed had frozen their defined benefit plans to new entrants. Of those who froze plans, 58 percent had also frozen the accrued benefits to existing participants, while 42 percent continued to accumulate accrued benefits for the current population.
• After working through the challenges of last year’s new audit requirements for 403(b) plans, over 80 percent of 403(b) sponsors surveyed believe they have established adequate internal controls over ongoing operations.
• 58 percent of plan sponsors stated that they were not considering a Roth feature in their plan at this time, slightly lower than the trend in the marketplace

Grant Thornton, Drinker Biddle & Reath and Plan Sponsor Advisors will be conducting a complimentary webcast on March 16, 2011, to explore the results of the 7th Annual Retirement Plan Survey. For more information, please register here.

To download a copy of the Retirement Plan Survey 2011, please go to www.GrantThornton.com/retirementsurvey.


About the Survey
Drinker Biddle LLP, Grant Thornton LLP and Plan Sponsor Advisors LLC conducted a confidential survey to gain a general assessment of the level of understanding of investments, fees and administrative practices related to retirement plans. The survey was conducted online from November 2010 to January 2011, with 429 independent plan sponsors participating. Survey topics included fiduciary and investment challenges, employer/employee economic challenges, plan design, tax and ERISA compliance issues, and 403(b) plans. Most participants came from the manufacturing, wholesale and distribution (29%) and not-for-profit (29%) industries with the remainder being in the retail (12%), financial institutions/services (10%), technology (9%), construction, real estate and hospitality (5%), general services (4%) and other (3%) industries. Survey participants primarily held the positions of CFO (53%), human resources/benefits manager (9%) and human resources/benefits vice-president (19%). The remainder held various finance positions.

About Grant Thornton LLP
The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.

About Plan Sponsor Advisors LLC
Plan Sponsor Advisors LLC (PSA) is an independent, retirement plan consulting firm. The staff of PSA brings a wealth of knowledge and experience to help companies manage their retirement plans and mitigate fiduciary risks. The firm has advised plans with over $55 billion of retirement assets since 2002. PSA’s clients include public and privately held companies of all sizes ranging from family held companies to global corporations, major universities as well as major healthcare systems and hospitals. The co-founders of the firm, Jennifer Flodin and Donald Stone, are well-known thought leaders in the industry.

About Drinker Biddle & Reath LLP
Drinker Biddle & Reath has more than 25 employee benefits professionals. Our lawyers work as a team with lawyers in other practice areas, such as health law, labor, securities, tax and bankruptcy to advise clients on employee benefits and executive compensation issues. Our practice includes all aspects of qualified and nonqualified retirement plans; health, welfare and fringe benefit plans; specialized employee benefits issues under the Internal Revenue Code and ERISA; executive compensation; ERISA litigation; investment adviser and fiduciary issues; ESOPs and other stock-based compensation plans; global equity plans; and litigation of these issues. For more information, please visit www.drinkerbiddle.com.

Contact: Jim Goyjer (310) 207-3361
12400 Wilshire Blvd. Suite 200
Los Angeles, CA 90025

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