Many executives say it's a matter of meeting employee demand and makes good business sense too.
The trend of companies beefing up and expanding their 401(k) programs was underscored in a poll of senior finance executives from large companies nationwide, released Monday by the Charles Schwab Corp.
The survey respondents were not disclosed but evidence of 401(k) upgrades abounds.
Ariba Inc., a Sunnyvale, Calif.-based company that produces accounting software, has made a half-dozen improvements to its 401(k) plan since 2006. It began matching employee contributions up to 6 percent, made enrollment automatic and added a Roth option and target-date funds.
Over the two years the company has rolled out new features, it has seen retirement assets among its more than 2,000 employees increase by 60 percent.
"We saw it as a tool to help us with retention and recruitment" in vying with larger Silicon Valley companies for talent, Jerry Bernard, Ariba's treasurer, said of the changes. "This definitely is something that has helped with our stature in the community and with our competitiveness."
The Schwab survey of 208 executives, conducted by CFO Research Services online in June, found that 84 percent agreed that a 401(k) plan is necessary for recruiting and retaining a high-quality work force. Also, 67 percent said they believe offering a 401(k) plan enhances the company's corporate reputation and 58 percent said it contributes to a company's long-term financial success.
Simply having a plan in place is not seen as enough. Schwab said 87 percent of those surveyed said it's important to provide employees with investment advice to help them make investment decisions. And 55 percent said they expect to devote even more resources to strengthening their plans in coming years.
Dean Kohmann, Schwab vice president of 401(k) plan services, said employers recognize that it behooves them to give their employees assistance and tools to help manage their accounts.
"Executives realize that if employees are stressed out financially, have excess debt, it really makes them less productive," he said. "There's a real financial benefit to the company, a long-term financial benefit, for their employees to be on track for retirement and financially fit."
Xilinx Inc., a semiconductor maker, moved last month to match 401(k) contributions by its approximately 3,500 employees dollar-for-dollar up to 6 percent; contributions had previously been discretionary based on company profits. It also added target funds as part of a push to improve the plan.
Like nearby Ariba, Xilinx had its rivals in mind as much as employees when it improved the program.
"If a company doesn't have a competitive 401(k) program in place, it's going to be very difficult to compete for talent," said Eddie Lee, Xilinx treasurer.
