A401(k) scorecard from Bank of America Merrill Lynch is the latest report to indicate that defined contribution retirement plans are strengthening. Balances, contribution rates and participation are all up - but confidence is not. Research from Unum and the Employee Benefit Research Institute says workers still feel financially insecure, and many are still planning on postponing retirement for financial reasons.

In May, the Plan Sponsor Council of America and the Principal Financial Group reported great strides in 403(b) retirement plan contributions for nonprofits. The same month, Fidelity Investments said that small businesses' plans have bounced back since the Great Recession. All of this ahead of the Bank of America Merrill Lynch report, in June, which says the year is off to a great start for DC plans overall.

More than 26,000 employees were automatically enrolled in Bank of America Merrill Lynch 401(k) plans in the first quarter of 2012, the scorecard reports, and only 7% opted out; among industry plans without automatic enrollment, less than one-fifth keep their opt-out rates below 10%. Additionally, the company reports 207 plans with auto-increase features, up 9.5% from the end of last year. Participants under those plans also rose by 9.3%, from 115,703 to 126,537.

Kevin Crain, head of institutional retirement and benefits services for Bank of America Merrill Lynch, says "there's lots of good news" in this scorecard, and that the data also point the way to how plans can be improved.

"This reinforces the importance of the private retirement system for employees' financial security," he says. "When you have more than 200,000 plan participants and, of those who took an action in their plan, two-thirds of those were a positive action, that's a good thing."

From January to March, 87,377 employees started saving in a 401(k) plan and 96,235 increased their contribution rate. Crain says the research continues to support the idea that modest increases in automatic deferral rates don't seriously damage participation.

"We are seeing far more sponsors with automatic enrollment increase their automatic deferral rate," he says. "We study opt-out rates [and] as we've seen the deferrals go up to 4%, 5%, 6%, the opt-out rates have not increased."

So why aren't plan participants more confident in their financial health? The EBRI reports record low levels in retirement confidence, and one recent survey says that the number of those feeling financially insecure is growing.

In Unum's fifth annual poll of working Americans, more than 40% plan on postponing retirement, and half report lacking confidence in their savings to cover lost income if they suffer a serious injury or illness.

More than a third of respondents (36%) say they don't feel financially secure, and the 16% who feel "not at all secure" is up from the previous year. Men (33%) feel less insecure than women (40%).

The shaky economy has led workers to prioritize employee benefits more than ever; 75% of those who rate their benefits package as very good or excellent say they are financially secure.

"Anxiety over finances increased in 2012, indicating that the modest improvements to our economy are not yet being felt by working Americans," says Barbara Nash, vice president of research for Unum.

Asked what their current target retirement age is, survey participants said 67.1, an increase of 2.6 years over what they said five years ago. Those aged 55 and above expect to retire after their 70th birthday; those 34 and younger still set 65 as the expected date. Employees cite personal finances (57%) as the main reason for postponing retirement.

Only a third of workers in the Unum survey said they could rely on employer-sponsored disability benefits should they suffer a work-halting illness or injury. Personal savings (56%) and assistance from family members (52%) were the most-cited ways of managing financially following a disability.

"This underscores a disconnect between financial expectations and realities," Nash says. "Research indicates that a very large percentage of Americans are living paycheck to paycheck. Yet our findings show that employees still believe they can rely on savings and each other if an illness or injury occurs."

Unum says employers should play a leading role in helping wage earners feel - and be - more secure by offering benefits like disability insurance and financial education, and by making sure the value of these benefits is well-communicated. And benefits education can be its own reward: 81% of those surveyed who rated their benefits education highly also called their employer an excellent or very good place to work.

BofA Merrill Lynch's Crain says, yes, more education is key, but he thinks the numbers will get better on their own as well.

"You see all this data that people aren't financially secure, they don't feel good, they feel like they're going to have to work forever," Crain says, "but I think we're at an early stage." Auto features are only a few years old at most companies, he points out, and they must be given time to accrue.

Older investors who've seen the market take a hit and younger participants just now learning to trust the system are going to "see more meaningful contribution flows come in" as the economy continues to heal and those auto-increase features start to add up.

"You survey these people three years from now, four years from now - they'll have much stronger opinions and confidence than they do today," Crain says.

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