Human resource professionals say the recession is causing many employees to delay retirement and reduce or suspend 401(k) contributions, according to a poll by the Society for Human Resource Management (SHRM).
Roughly 68 percent of HR professionals polled said the number of employees planning to delay retirement due to the recession has increased during the past 12 months. The findings are detailed in the SHRM poll,“The U.S. Recession and its Impact on Employee Retirement.”
“The recession is brutal with aftershocks to be felt for sometime as employees and employers adjust to a new economy and financial landscape impacting business operations, careers, and personal finances,” said Steve Williams, SHRM’s director of research.
Sixty-seven percent of HR professionals polled reported that the number of employees planning to reduce 401(k) contributions also increased during the past 12 months, while 62 percent reported the same regarding employees who have suspended contributions. Only 10 percent said employees were planning to increase 401K contributions, states SHRM in a press release describing the poll results.
Nearly half (49 percent) of HR professionals said they’ve seen an increase in the number of employees asking for advances on their 401(k) savings. Also, 16 percent reported the same of employees asking for advances on their wages.
In another sign of recession times, 26 percent of HR professionals polled report an increase in the number of employees having their wages garnished by collection agencies during the past 12 months.
The poll also shows that employees are being proactive about personal financial recovery, with 47 percent of HR professionals saying the number of employees requesting more information specific to investing/retirement planning has increased during the past 12 months.
The overwhelming majority (72 percent) of HR practitioners polled report they will “most likely” offer employees educational literature and presentations specific to investing/retirement planning in the bleak economy.
Other solutions HR professionals reported include revising investment policies for their company’s 401(k), pension plan (21 percent); changing 401(k) and pension plan investment management companies (13 percent); offering additional investment options for employees (10 percent); and suspending investments in mutual funds determined to be too risky (eight percent).
“HR’s response in offering solutions and closing the financial literacy gap on retirement is essential,” said Williams. “Retirement issues impact all generations, not just those for whom retirement is near.”
The HR practitioners polled told SHRM that 41 percent of their employees are both Baby Boomers age 45-64, and Generation X age 29-44.”
Seventeen percent of employees are Millennials and Generation X, age 28 and younger. Only six percent are veterans – also known as Traditionalists and the WWII Generation – age 65 and older.