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A recent study finds that the need for companies to attract and retain employees continues to drive employer enhancements of 401(k) plans. In addition, compliance, fiduciary and technology issues are having an impact on how plans are communicated and administered.

Those are among the results of Deloitte & Touche LLP's national "2000 401(k) Plan Benchmarking Survey," conducted by the firm's Human Capital Advisory Services practice.

"The results of this year's survey clearly indicate that companies are responding to the tight labor market and offering enhanced benefits such as accelerated eligibility and greater choice in investment options," said Patricia Jackson, Deloitte & Touche principal and survey director.

"Technology is also gaining a foothold with both plan sponsors and providers and is vastly improving the quality of plan administration and communication, employee participation, and the speed and efficiency of transactions."

According to Jackson, the survey indicates that plan sponsors have a high level of information that they can benchmark their plans against, such as percentage of employees enrolled. The survey also provides details on plan fees, deferral and matching provisions, plan eligibility, vendors, and performance standards.

Among the study's findings are:

• Employers are making 401(k) plan participation available to employees more quickly, with 69% of respondents reporting that employees are eligible within six months of employment and 34% reporting that new hires are eligible immediately. In addition, 78% of respondents provide some form of matching program. Employers are also offering more investment choices than ever before, with the average number of investment options being nine to 10. Plan sponsors continue to pay the majority of 401(k) plan-related fees.
  
• Compliance and fiduciary issues are changing how employers manage their plans. The number of employers with written investment policies is 60%, up 10% from last year's survey. In addition, 86% of plan sponsors report conducting plan reviews at least once a year.
  
• Technology is changing how plans are administered and communicated. The study found 84% of companies have Internet access for plan participants and 88% allow transactional activity via the Internet. More than two-thirds (68%) of respondents are using the Web to communicate general plan information. However, only 18% are currently offering investment advice via the Web, less than half (44%) utilize the Web to provide employee education, and paperless loans are still in the minority (41%).

Deloitte & Touche conducted the study in July and August 2000. It is based on data collected from 452 human resource and employee benefits executives nationwide. Responding employers had an average of 2,000 employees.

Edited by Steve Tarnoff
Managing Editor, HRHub.com
Starnoff@vertical.net