The retirement system is undergoing major changes, and many organizations are trying to adapt in ways that will leave their employees well positioned for a comfortable retirement.

"Continued changes to the retirement landscape — including recent legislation, tighter reporting and funding rules, and the gradual shift of risk from employers to employees — is prompting companies to more actively manage their retirement plans this year," according to a new study from global human resources firm Hewitt Associates.

As a result of these changes — new funding rules for pensions and increased scrutiny on retirement-plan operations in general — companies are increasing their focus on reducing retirement-plan risk and ensuring that employees take appropriate advantage of their retirement plans, according to Hewitt's study of 190 midsize to large U.S. companies.

According to Hewitt's survey, almost three quarters (72 percent) of companies that offer a pension plan say they will make no changes to those plans in 2008, compared with just 41 percent last year. Only 3 percent say they are very likely to close their plans, and 2 percent say they are likely to freeze their plan, down from 6 percent and 4 percent respectively.

Instead, companies are focusing on ways to manage financial and other risks of their plans more effectively, given the requirements of the Pension Protection Act. In addition to performing funding and accounting projections, and reviewing funding strategies, 29 percent say they are very likely to assess the risks that their pension plans are running based on current strategies.

Among those companies offering pension plans:

• Almost two-thirds (63 percent) said they are very likely to perform funding and accounting projections;
• Thirty (30) percent plan to perform an asset liability study; and
• Twenty-nine (29) percent are very likely to assess the risks that their pension plans are running based on current strategies.

More than half (56 percent) of companies still rank employees' taking accountability for retirement as a high priority this year, and half (50 percent) say they plan to focus on helping employees better understand their retirement benefits. Much of their efforts will be carried out through communications:

• Two-thirds (66 percent) of companies are very likely to undertake a communication initiative on participation in 401(k) plans;
• Sixty-four (64) percent are likely to communicate to their employees about diversification and fund usage; and
• Fifty-eight (58) percent plan to focus their communication efforts on 401(k) contribution levels.

As a way to ensure employees take appropriate advantage of the retirement plans offered to them, automated tools are becoming standard features in 401(k) plans. The number of employers offering a 401(k) plan automatic enrollment feature continues to grow, with 44 percent of employers now doing so, up from 36 percent in 2007, according to the survey. In addition, 30 percent of the employers found not to offer automatic enrollment say they are likely to add the feature this year; 27 percent are somewhat likely to do so.

Interestingly, companies that have frozen or closed their pension plans are more likely to offer automatic enrollment to their employees than companies who offer only 401(k) plans or who offer an open pension plan.

"Optimizing employee benefits requires careful consideration of plan design and proactive communication with employees that will support employees' efforts to make good decisions around saving and investing for retirement," Alison Borland, defined contribution consulting practice leader at Hewitt, said in a statement. "As such, they are taking more aggressive steps to equip workers with tools and information that can help improve saving and investing habits."

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Resource: Hewitt Survey Reveals New Employer Trends in Retirement