As the recession wears on, more employees are taking hardship withdrawals from their 401(k) and 403(b) retirement plans, and employers continue to increase employees' share of health care premiums, a Watson Wyatt Worldwide survey concludes.

It also appears that employers are less likely to increase benefits communications to address either issue, the survey found.

Although the April survey reported generally upbeat news about employers' reducing the use of layoffs, hiring freezes and salary freezes as cost-cutting moves, responses to three questions pertaining to employee benefits were less promising. These included: 401(k) and 403(b) hardship withdrawals, changes in investment mix and employer matching contributions; rising employee contributions for health care premiums; and increasing benefits communication.

Of those areas, 44% of employers reported an increase in the number of hardship withdrawals taken from these retirement plans, up from 35% in February, 16% last December and 15% last October.

However, it appears employees' exodus from equities may be peaking, as 78% of employers said employees are changing their investment mix to move out of equities, compared with 79% in February, 59% last December and 53% last October.

Regarding employer matching contributions, only 8% of employers expect to make a change in the next 12 months, down from 12% in February. However, 22% of employers said they have already made a change in matching contributions and do not plan future changes, up from 12% in February.

"If we have to look at a short-term concern, which hopefully doesn't turn into a long-term concern, the retirement health of people in America looks to be at risk right now," said Robyn Credico, national director, defined contribution consulting at Watson Wyatt based in Arlington, Va. "It's pretty dismal."

Approximately 26% of employers said they plan to increase employee contributions to health care premiums, up from 24% in February. Meanwhile, 29% of employers said they have already made such changes and do not anticipate future increases in employee contributions, up from 22% in February.

Employer plans to boost benefit communications also appear to be diminishing, with just 25% of employers saying in April that they plan to do so, down from 27% in February, 35% last December and 35% last October. Forty-three percent of employers reported already having made such changes with no plans to increase communications further, up from 31% in February, 32% in December and 35% last October.

The "Effect of the Economic Crisis on HR Programs" survey is ongoing research on the financial crisis. The Watson Wyatt survey includes responses from human resource executives at 141 U.S.-based employers. Bimonthly reports on the survey results began last October.

The report is available at www.watsonwyatt.com.