Not a Member?  Become One Today!

401(k) Plans Add Features to Drive Participation and Savings
 

By SHRM Online staff  9/13/2011

A growing number of U.S. employers are adding 401(k) plan features that help drive participation and savings, according to an analysis by Charles Schwab, a 401(k) provider.

 Key statistics from the analysis of Schwab-managed plans covering about 1.5 million retirement plan participant revealed that:

81 percent of employers made 401(k) advice available to plan participants in 2011 vs. just 42 percent in 2005.

70 percent of employers included target-date funds in their fund line-ups vs. 57 percent in 2005.

41 percent of employers automatically enrolled participants vs, just 5 percent in 2005. At companies with more than 2,500 participants, 57 percent used automatic enrollment.

36 percent of employers using automatic enrollment also used automatic savings increases, up from 14 percent in 2006 when Schwab’s plan clients first began implementing automatic savings increases.

More than two-thirds (68 percent) of employers provided a 401(k) matching contribution, down from a peak of 76 percent in 2006.

Feature

2005

2006

2007

2008

2009

2010

6/30/11

Participant advice

42%

56%

58%

62%

70%

80%

81%

Target-date funds

57%

62%

62%

65%

68%

70%

70%

Automatic enrollment

5%

14%

24%

33%

35%

39%

41%

Automatic enrollment and automatic savings increase

N/A

14%

24%

30%

35%

36%

36%

Employer match

73%

76%

75%

72%

67%

68%

68%

“The 401(k) plan is now the primary source of retirement savings for an overwhelming majority of Americans,” noted Catherine Golladay, vice president of 401(k) participant services at Charles Schwab. “We see more employers looking for ways to provide additional support for participants, focusing on those tools that clearly drive results—such as advice, automatic enrollment and automatic savings increases.”

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Retirement Plans Resource Page

Sign up for SHRM’s free Compensation & Benefits e-newsletter

Copyright Image Obtain reuse/copying permission