By Pension and Benefits Editorial Staff
Employers are contributing to 401(k) plans in record levels, according to new research from the Plan Sponsor Council of America's (PSCA) 61th Annual Survey of Profit Sharing and 401(k) Plans. PSCA, part of the American Retirement Association, found that employers are contributing an average of 5.1% of pay to their employees' 401(k) accounts, which is the highest ever recorded in the history of the survey.
PSCA determined that the 5.1% rate of contribution plus an average savings rate by participants of 7.1% equals a total savings rate of more than 12%.
Plan enhancements. The survey found that plan sponsors continue to use design features to increase participation and savings rates, such as Roth availability and automatic enrollment. The availability of Roth contributions has doubled in the past decade and is now offered by 70% of all plans, according to PSCA. This includes small plans, which once were behind large plans in adopting Roth contributions. More than half of employers now use automatic enrollment with default deferral rates above the traditional 3% threshold - twice as many as a decade ago.
“The nation's best employers have long appreciated the value in offering a workplace retirement plan,” noted Hattie Greenan, PSCA's Director of Research and Communications. “Design enhancements that leverage behavioral finance insights such as automatic enrollment, coupled with generous employer match contributions, are helping build a more financially secure retirement for America's workers.”
Additional findings. Additional highlights from the survey include:
- The use of dollar-per-dollar matching above 3% of pay increased by nearly 50% from 24.1% in 2016 to 35.8% in 2017.
- More than 61.2% of plans now use automatic enrollment to boost participation.
- Close to three-fourths (73.1%) of plans now retain an independent investment advisor to assist with fiduciary responsibilities - up from 69.5% in 2016.
- The use of mobile technology to provide plan services to participants has doubled since 2014 and is now used by 43.6% of companies.
The 61st Annual Survey reflects the 2017 plan-year experience of 605 DC plan sponsors.
SOURCE: PSCA press release.
Interested in submitting an article?
Submit your information to us today!Learn More