Retirement Plans Add Options Against Inflation: Mercer

Mutual funds and other vehicles that purport to help investors fight inflation are the most popular new investment strategy being adopted by corporate retirement plans, according to a new survey released on Thursday.

Forty-six percent of 233 employers surveyed said they are adding or considering the inclusion of inflation-fighting funds to their retirement plan menus, according to Mercer, the benefits consultant.

The most popular anti-inflation offering of companies that have adopted the investment strategy are Treasury Inflation Protection Securities funds, or TIPS, which were named by 24 percent of all respondents.

Another 12 percent offer commingled investments that include commodities, real estate investments and other asset classes purported to withstand inflation.

Few plans give employees the option of investing in gold or other precious metals funds, the most popular inflation-fighting tools, according to Mercer's investment survey. The survey was taken in May before gold prices began their parabolic summertime ascent.

The vast majority of plan sponsors just don't think these strategies are diversified enough to put into their plans, said Andrew Kramer, a senior consultant with Mercer. More than 80 percent of employers surveyed said they had no plans to add precious metals options.

On the other hand, a growing number of plans sponsors are giving employees access to investment advice. Mercer said 50 percent of respondent companies offer advice or a managed account options.

Employees, however, aren't responding. Sixty-eight percent of employers said just 10 percent or fewer of plan participants have signed up for investment advice or managed account options.

In another survey finding, 58 percent of respondents said they have no plans to transition from mutual funds to other investment vehicles such as collective trusts or separate accounts that offer carry lower fees.

Almost half of respondents represented publicly traded companies, and 81 percent offered 401(k) plans. Plan sizes ranged, with 26 percent of respondents working at those with $1 billion or more of assets while 44 percent were in small plans with less than $250 million.