Employers optimistic

Underscoring a significant change from the year prior, 59 percent of employers expect their company's financial situation to improve over the next 12 months (up from 49 percent) and almost half of employers (48 percent) expect the economy to improve over the next 12 months (up from 45 percent).

Based on the study, employers are generally reporting higher levels of employment, with more than half (55 percent) hiring additional employees in the last 12 months. This positive trend is more prominent with large companies where 69 percent hired workers compared to 54 percent of small companies. Additionally, fewer companies implemented layoffs or downsized in the last twelve months – 33 percent compared to 48 percent last year.

Small Employers Lag Behind Larger Peers in Offering Benefits

Most employers (85 percent) believe that a 401(k) or similar plan is important for attracting and retaining employees, and most (85 percent) believe their employees view these plans as an important benefit. Yet, small employers continue to struggle to provide retirement benefits to their employees in comparison to large employers.

Plan sponsorship rates of 401(k) or similar plans are significantly higher for large companies (94 percent) than small companies (76 percent). Large companies (79 percent) also continue to be more likely than small companies (69 percent) to offer a matching contribution to their 401(k) or similar plan.

Of those small companies that do not currently offer a 401(k) or similar plan, only 21 percent indicate they are likely to begin offering a plan the next two years; however, a higher percentage (34 percent) indicate they would be likely to consider joining a multiple employer plan. Of companies that are not likely to offer a 401(k) plan in the next two years, the most common reasons are: difficult business conditions (47 percent), concerns about cost (43 percent) and perceived lack of employee interest (43 percent).

Employers Voice Warning Signs About Employee Retirement but Not Doing Enough

Most employers (82 percent) feel their employees do not know as much as they should about retirement investing. Similarly, while there has been a gradual decline over the last three years in employers agreeing their employees could work until age 65 and still not save enough to meet their retirement needs, a full 70 percent of employers still agree (down from a high of 80 percent two years ago).

Employees' lack of knowledge about saving and investing for retirement provides employers with an important opportunity to help educate them. Since the recession began, few employers (15 percent) indicate they or their retirement plan provider has implemented any programs to help employees get back on track with their retirement savings. Large companies have been much more likely (34 percent) than small companies (13 percent) to have implemented any such programs.

Employers also have an opportunity to help employees transition into retirement. Among those employers who offer a 401(k) plan, 43 percent offer financial counseling and 19 percent offer pre-retirement seminars for employees who are transitioning into retirement. Large companies are more likely to offer both, with 53 percent of large companies offering counseling and 46 percent offering seminars. (In contrast, of those employers who do not offer a plan, 78 percent do "nothing" to help their employees).

Recommendations for Helping Improve Employees' Retirement Outlook

The retirement services industry, media, policymakers, plan sponsors, and employers have an important role to play in helping improve the retirement outlook of workers of both small and large employers.

"As the jobs and growth engine of our economy, small businesses can play a vital role in helping American workers prepare for retirement," said Collinson. "By sponsoring a 401(k) plan, encouraging participation, and promoting available planning tools, these employers can help workers save and invest for a more secure retirement."