Americans are more worried about retirement, and they'regetting less help saving for it.

Employers cut their contributions to workers' retirements by aquarter from 2001 to 2015, according to a new report by theconsulting firm Willis Towers Watson. The biggest driver: thedecline of traditional defined-benefit pensions, which havebeen replaced by stingier, 401(k)-style, defined-contributionplans.

Retirement benefits—including employer contributions topensions, 401(k)s and retiree health-care benefits—fell from9.1% of worker pay in 2001 to 6.8% in 2015. Spending ontraditional pensions plunged 76%, to less than 1% of workerpay. Medical benefits for retired workers became increasinglyscant, falling from 1.2% of worker pay to just 0.2%.

The good news is that many companies, while shutting down orfreezing pension plans, have sweetened their 401(k) matchingcontributions. Some large employers, eager to recruit top jobcandidates in such hot areas as technology, have boostedbenefits, as the Wall Street Journal reported on Monday. Anexecutive at Microsoft Corp. in charge of benefits told the Journalthat the company's newly generous employer match hadproved so popular that “it's blowing my budgets.”

But higher 401(k) matches aren't making up for theloss of other retirement benefits overall, and even the mostgenerous 401(k) plans usually lack a traditionalpension's biggest selling point: a guaranteed income for life. Witha 401(k), it's up to individual workers to figure out how much theyshould be saving—and how to make the money last, once they'veretired.

While retirement plans got less generous, spending oncurrent workers' health insurance soared, Willis Towers Watsonsaid. To keep up with the rising cost of health care in the U.S.,employers doubled their spending on health care as a percentage ofemployees' pay, from 5.7% in 2001 to 11.5% in 2015.

In 2001, retirement made up the majority of the cost ofproviding benefits to employees, Willis Towers Watson estimated.But its share has fallen steadily. By 2015, health care for currentemployees was 63% of all benefit spending.

Workers aren't necessarily getting much for this extra healthspending. In fact, other studies have shown that workers'contribution to their own health care, in the form of deductiblesand co-pays, is also up.

Unfortunately, the rising cost of health care is hittingAmericans twice. While they're working, health costs are bleedingaway their ability—and their employers' ability—to pitch in forretirement. After retirement, unless current trends change,they face the daunting prospect of higher and highermedical bills.

The result is pessimism about retirement. Labor Departmentstatistics show more and more Americans working past 65 andeven 70. In a Willis Towers Watson survey of more than 4,700full-time workers, 76% agreed that “my generation is likely tobe much worse off in retirement than my parents' generation was.”More than a quarter of workers 55 or older said they “feelstuck” at work and would retire if they could.

Bloomberg News

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