Just as President Bush and other Republicans are plowing ahead with plans for personal Social Security accounts and other individualized...

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WASHINGTON — Just as President Bush and other Republicans are plowing ahead with plans for personal Social Security accounts and other individualized investment vehicles, employers operating 401(k)s and similar plans are becoming increasingly fearful that their workers aren’t up to the job of managing those accounts.

A new survey by Hewitt Associates, a big benefits consulting firm in Lincolnshire, Ill., finds that only 18 percent of large employers are confident their employees will retire with enough money to see them through.

And only 12 percent think their workers even understand their retirement benefits and are taking responsibility for their future.

“Many employees are just not actively using the retirement programs that are available to them. Either it’s not a burning [issue for them], or they don’t feel up to the task,” said Lori Lucas, Hewitt’s director of participant research.

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Companies, having started down this path by terminating, freezing or never having offered a traditional pension, have little choice but to redouble their efforts to persuade workers to invest and to try to do it intelligently.

They see this as the key issue of 2005, Lucas said.

The employer approach, Hewitt found, is to put more emphasis on education, but increasingly, companies seem to be having doubts about its effectiveness.

While continuing to talk up participation in 401(k) plans, many are simply making enrollment automatic unless the worker opts out.

They are also looking at automatic contribution levels and automatic rebalancing to keep workers from becoming too concentrated in a particular investment area, as happened during the tech-stock boom.

Getting in early and getting a good return are the keys to making 401(k) accounts work.

“It’s a question of having time,” said David Wray, president of the Profit Sharing/401k Council of America.

Wray’s group figures that the key numbers are 8, 8 and 40, meaning that workers who contribute 8 percent of pay (which may include an employer match) and earn an average return of 8 percent for 40 years will be able to retire with a lump sum equal to 10 times their final year’s pay. That sum, the group says, ought to provide for an adequate retirement.

“Ten times final pay gets it done,” Wray said. “The issue is the 40 years. You’ve got to start at 25 to retire at 65.”

“We definitely have a challenge,” he added. “We’ve got to get those 20-year-olds in the plan.”

The need is likely to become more acute as companies increasingly move away from traditional pensions.

Hewitt found that while most large firms that operate these pensions don’t plan to change them this year, more than a quarter — 27 percent — said they will consider excluding new employees in the future. Similarly, one in five companies is considering switching to a 401(k) or other “defined contribution” plan only.

This means that many of Wray’s 20-year-olds will never have a traditional pension.

So in an era of reduced Social Security and vanishing traditional pensions, today’s workers must save early and often to have any hope of a comfortable retirement.