As financial pressures rise, employee confidence regarding retirement continues to fall: -- Retirement is still number one goal, but living expenses take priority today -- Participants look to employers and plan administrators for help

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Participants in 401(k) plans are becoming increasingly distracted from the process of saving for retirement as more immediate financial pressures take priority, according to the 2007 results of the fifth annual Mercer Workplace Survey(TM), a national study of employee attitudes and behaviors related to their company sponsored benefits. Conducted by Mercer's outsourcing business, the survey is based on a national cross-section of more than 2,000 employees who are enrolled in their company's 401(k) and health plans.

We see a significant opportunity for employers and plan administrators to help their employees save more for retirement in truly meaningful ways

    Faced with falling home prices and rising debt, respondents expressed - for the first time since 2004 - that they are more worried about keeping up with monthly expenses than saving for retirement. Yet even as saving for retirement has declined as a financial priority, participants acknowledge they hold significant responsibility for funding their retirement, with eight in ten indicating that they accept personal responsibility for their income in retirement. As a result, participants are continuing to look to their employers and 401(k) plan administrators for help in making decisions on retirement savings strategies.

"These findings challenge employers and their 401(k) administrative partners to take a more proactive approach to assist participants in preparing for retirement," said Jeff Miller, President of Mercer's outsourcing business. "Simplifying the process of saving for retirement through effective plan design, coupled with integrated education programs that recognize the challenges participants face today, are critical to achieving this goal. These results also suggest participants would welcome programs that integrate features such as automatic enrollment, automatic contribution increases, and enriched match programs to help them save more for retirement."

In 2007, the decline in expected home values has contributed to a growing sense of uneasiness among participants and their current financial outlook. As a result, savings priorities are being re-ordered - with retirement taking the biggest hit. While saving for retirement is still the number one savings objective overall for seven of ten respondents, retirement continues to lose ground to more immediate financial needs. In fact, only 15% of households today consider "saving for retirement" to be their biggest financial worry, well below the 21% who designate the struggle just to keep up with their monthly expenses. As recently as 2004 these positions were reversed, with 24% of participants most worried about retirement savings and only 15% most worried about monthly expenses.

This short-term financial focus is not without consequences, a fact acknowledged by participants. As they envision life in retirement, six in ten expect to work at least part-time in retirement and four in ten expect to reduce their standard of living in retirement, with concerns around health care costs continuing to contribute to a sense of financial uncertainty.

Despite the financial concerns and reduced expectations for life in retirement, participants still acknowledge the necessity of saving for retirement in their 401(k) plan and continue to express regret that they have not been more disciplined savers. When asked what they would do differently if they could re-live the past year of their retirement savings and investing life, almost half (48%) wished they had saved more pay in their 401(k), consistent with previous results, but four in ten would have increased their contributions to the tax-deferred maximum and nearly one third felt they would have paid closer attention to their accounts, both significant increases compared to previous years.

As participants deal with these issues, they continue to rely heavily on plan sponsors and the companies that administer their 401(k) plans for information and resources for help in making decisions about saving for retirement. "Employers" and "The company that administers my 401(k)" are the top two sources of information on investing, ahead of other sources such as independent research, friends and family, newspapers, and magazines. This represents an opportunity for plan sponsors and their administrative partners to take the lead in providing tools and resources that reinforce the basics of retirement planning and motivate their employees to take action to achieve their retirement goals.

The survey also provides some direction to plan sponsors and administrators for solutions that might encourage participants to become more engaged in their savings plan. More than half of respondents who do not expect to contribute at all or as much as the maximum say they would likely change their minds if their employers raised the company match, which ranked ahead of getting a big raise or bonus as an incentive to start saving more. Also apparent is the critical role of health care costs in retirement planning, indicating participants need more support in making decisions around health benefits.

"We see a significant opportunity for employers and plan administrators to help their employees save more for retirement in truly meaningful ways," explained Mr. Miller. "Employers and administrators should not only enhance and simplify their plan design, but they need to respond to the issues identified by participants through integrated education campaigns and decision support tools that address the full spectrum of retirement savings concerns, including paying for health care and providing for income in retirement, to keep participants actively engaged in achieving their retirement goals."

About the Mercer Workplace Survey(TM)

The Mercer Workplace Survey is a national study of employee attitudes and behaviors around their company-sponsored benefits plans, conducted annually since 2003 by Mercer. The 2007 findings are based on a national cross-section of 2,246 active 401(k) participants who are also currently enrolled in their employer's health plan. Online interviews were conducted in June and July, 2007.

About Mercer

Mercer is a leading global provider of consulting, outsourcing, and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement, and other benefits. It is a leader in benefits outsourcing. Mercer's investment services include investment consulting and multi-manager investment management. Mercer's 17,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, and London stock exchanges. For more information, visit

Securities offered through Mercer Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/SIPC. Mercer HR Services, Mercer Securities, and MMC Securities Corp. are affiliates of and owned by Marsh & McLennan Companies.

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