Nearly One-Third Of Employers To Restore Matching Contributions In 2011
Despite slow recovery and retirement plan cutbacks, employees not concerned about retirement readiness; plan sponsors increase investments in "emerging market" assets by 30%

LOS ANGELES, CA, March 19, 2011 /24-7PressRelease/ -- 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.

Press Release Contact Information:

Danielle Tarasiuk
Carl Terzian Associates
Public Relations Coordinator
12400 Wilshrie Blvd.
Los Angeles, CA
USA 90025
Voice: (310) 207-3361