A growing number of U.S. employers are providing their employees with automatic 401(k) plan features to drive up plan participation and savings, according to data collected from 401(k) plans serviced by Schwab Retirement Plan Services Inc. through the first half of 2010. Among the findings pertaining to the approximately 1.5 million company retirement plan participants in Schwab-administered plans:
• More than three-quarters (76 percent) of employers include target-date funds in their fund lineups, compared to 57 percent in 2005.
• Nearly three-quarters (74 percent) of employers make 401(k) advice available to plan participants, as compared to 42 percent in 2005.
• 38 percent of employers enroll participants automatically, up dramatically from just 5 percent in 2005. An even greater number of large companies enroll participants automatically. Among companies with more than 2,500 participants, 53 percent use automatic enrollment.
• 37 percent of employers using automatic enrollment also use automatic savings increases, up from 14 percent in 2006, when Schwab’s plan clients began implementing automatic savings increases.
• 69 percent of employers provide a 401(k) matching contribution, down from a peak of 76 percent in 2006.
|
Feature Adoption Rates (2005 Through June 30, 2010) |
|
|
2005 |
2006 |
2007 |
2008 |
2009 |
06/30/2010 |
|
Target-date funds |
57% |
62% |
70% |
73% |
75% |
76% |
|
Participant advice |
42% |
56% |
62% |
66% |
74% |
74% |
|
Automatic enrollment |
5% |
14% |
25% |
34% |
37% |
38% |
|
Automatic enrollment and automatic savings increase |
N/A |
14% |
24% |
30% |
35% |
37% |
|
Employer match |
73% |
76% |
75% |
72% |
67% |
69% |
|
Source: Schwab Retirement Plan Services Inc. |
Stephen Miller is an online editor/manager for SHRM.
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