Among the planned updates:
- Fewer investment choices: Many large and mid-size corporate plan sponsors now offer fewer than 20 funds, according to a Towers Watson survey. The aim is to enable participants to make more appropriate investment choices from a smaller field of choices, which their employers can more closely monitor.
- More index funds: An Aon Hewitt survey of 401(k) plan sponsors indicates that companies are migrating toward offering more passively managed index-linked funds that have lower expense ratios than actively managed funds.
- Shifting the recordkeeping burden: The percentage of employers that require employees to shoulder plan recordkeeping costs has surged to 58% from 23%, according to Towers Watson. Some firms are still willing to split the fees with their participants.
- Auto-enroll and escalation: More companies (68%, up from 57% in 2010, per Towers Watson) automatically enroll employees in their 401(k) plans. More than half of companies surveyed provide an automatic escalation feature to regularly increase the rate of employee savings (which many employees welcome), according to Aon Hewitt.