Research

2010 Defined Contribution Survey

Published in PLANSPONSOR November 2010

For more than a decade, PLANSPONSOR's annual Defined Contribution Survey has been the most important industry benchmark, measuring and evaluating 401(k) and other DC providers according to feedback from their own clients. Dozens of categories are rated in service to the employer as well as participant service.

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Industry Stats

Type(s) of DC plan(s) offered
20092010Change
401(k)88.8%90.1%1.5%
401(a)4.8%4.4%-7.3%
403(b)8.3%8.3%0.1%
4576.8%6.3%-6.7%
Roth 401(k)/Roth 403(b)18.8%20.2%7.6%
Money Purchase2.8%3.2%14.5%
Profit Sharing/ESOP18.3%15.1%-17.7%
Nonqual Deferred Comp8.6%7.6%-12.0%
SEP0.3%1.4%359.7%
SIMPLE IRA0.2%1.3%572.3%
Other2.2%2.7%20.7%
Number of participants in DC plan
20092010Change
<10041.1%50.2%22.2%
100-49927.3%27.3%0.0%
500-9998.9%6.9%-22.0%
1000-4,99912.8%9.8%-23.9%
5,000-9,9994.3%2.7%-36.8%
>10,0005.6%3.1%-44.6%
Total DC plan assets
20092010Change
<$5MM46.5%53.6%15.2%
$5MM – $50MM30.6%30.9%0.8%
>$50MM – $200MM11.0%8.2%-25.1%
>$200MM11.9%7.3%-38.4%
Plan design elements
20092010Change
Auto-enrollment30.8%29.4%-4.5%
Auto-deferral increases15.5%10.3%-33.3%
Written IPS70.2%56.1%-20.1%
Profit-sharing contribution53.0%46.9%-11.5%
Employer match73.6%76.6%4.1%
Use a financial adviser62.5%62.4%-0.2%
Investment committee for the DC plan
20092010Change
Employees only51.2%47.9%-6.5%
Non-employees only1.8%2.1%12.8%
Employees & non-employees15.4%13.8%-10.4%
No investment committee31.6%36.2%14.8%
Participation rate among eligible employees
20092010Change
Average72.3%71.5%-1.1%
Median78.0%75.0%-3.8%
Immediately upon hire31.9%28.3%-11.2%
Within 3 months25.0%25.8%2.8%
After 4 to 6 months9.8%9.4%-3.4%
After more than 6 months33.3%36.5%9.6%
Implementation of auto-enrollment
20092010Change
New / future employees89.1%
Existing employees not enrolled in plan32.6%
Existing employees enrolled in plan but contributing below auto-deferral rate (opt-out auto-boost)7.8%
Existing employees enrolled in plan but not invested in the QDIA (opt-out re-enrollment)2.0%
Default investment for auto-enrollment
20092010Change
Traditional Target-Date / Lifecycle Fund (Actively Managed)45.6%
Passive Target-Date / Lifecycle Fund (Indexed)7.3%
Risk-Based Lifestyle Fund4.5%
Stable Value Fund / GIC6.9%
Balanced Fund15.5%
Managed Account5.6%
Money Market Fund9.7%
Other4.8%
Number of investment options offered
20092010Change
Average19.521.49.6%
Median17185.9%
Number of investment options held by participants
20092010Change
Average5.36.318.9%
Median4.5511.1%
Types of investment options offered
20092010Change
Target-Date Funds43.1%60.5%40.5%
Risk-Based Lifestyle Funds21.7%28.4%30.9%
Employer Stock8.0%6.5%-18.2%
Self Directed Brokerage14.5%14.2%-1.6%
Real Estate12.1%19.1%57.3%
Alternative Investments 2.3%3.6%58.8%
ETFs1.1%1.2%12.9%
Approximate maximum match
20092010Change
>100% of 6% of salary7.0%5.9%-15.2%
100% match of 6% 10.3%10.5%2.0%
51%–99% of 6%23.3%24.4%4.6%
50% match of 6% 28.3%28.9%2.0%
<50% of 6% 31.1%30.3%-2.6%
When participants are 100% vested
20092010Change
Immediately on enrollment29.2%29.4%0.8%
6 months0.6%1.4%131.2%
1 year5.6%6.5%16.4%
2 years3.9%3.6%-8.2%
3 years12.2%12.5%2.4%
4 years3.4%3.7%9.3%
5 years24.9%23.6%-5.4%
after more than 5 years20.2%19.2%-4.5%
Participants with outstanding loans
20092010Change
Average12.3%12.8%4.1%
Median10.0%10.0%0.0%
Participants making hardship withdrawals
20092010Change
Average2.7%2.1%-22.2%
Median1.0%1.0%0.0%
Importance in selecting/evaluating a provider
20092010Change
Overall participant servicing34.6%
Overall sponsor servicing15.0%
Quality of client service team11.9%
Cost / Fees11.3%
Range of investment options9.6%
Experience / Plan design consulting5.2%
Provider's reputation / Brand4.8%
Flexibility in plan design2.0%
Participant website / tools1.2%
Sponsor Website / tools0.8%
Integration with other benefits offerings0.7%
Prior Relationship(s)0.2%
Socially Responsible Offerings0.1%
Satisfaction with participant services 1–7 scale
20092010Change
Participant website functionality6.33
Online tools / savings & investing services6.28
Participant statements6.43
Overall education program6.03
Communication materials6.14
Enrollment assistance6.31
Retiree services / payments6.29
Onsite meetings6.11
Range of investment options6.4
Participant loan / withdrawal processing6.47
Participant beneficiary administration6.29
Participant fee disclosure6.06
Satisfaction with sponsor services 1–7 scale
20092010Change
Sponsor website and tools6.32
Plan analytics / reporting / benchmarking6.23
Form 5500 processing6.37
Compliance support / testing6.45
Legislative / regulatory updates6.33
Account / service team industry knowledge6.58
Account / service team responsiveness6.55
Staff consistency / lack of staff turnover6.52
Plan design flexibility6.41
"Cost-to-Value" of plan fees6.24
Investment options formally reviewed
20092010Change
Quarterly30.8%27.5%-10.5%
Twice a year14.5%16.0%10.6%
Annually38.8%38.0%-2.0%
Every 1-2 years5.7%6.6%15.3%
Every 2-3 years2.8%3.0%7.2%
Every 3+ years2.4%2.8%17.1%
Never3.8%4.6%21.7%
Other1.2%1.4%15.2%
Investment vehicles used in DC plan
20092010Change
Mutual funds87.4%90.1%3.1%
Separate account13.6%13.3%-2.4%
Managed account24.7%31.9%29.2%
Commingled pool5.9%6.6%10.7%
Collective trust10.2%10.7%5.0%
Participants taking advantage of the maximum match
20092010Change
All or nearly all participants24.8%24.9%0.4%
Vast majority(75% or more)32.4%33.4%3.1%
About half22.6%22.2%-1.8%
Less than half20.2%19.5%-3.5%
Top 10 industries
20092010Change
1. Manufacturing- Industrial10.2%
2. Building/Construction/Contracting5.6%
3. Manufacturing-Consumer Products5.5%
4. Health-Care Organization(for profit)4.9%
5. Nonprofit Organization/Endowment/Founation4.1%
6. Retail4.1%
7. Health-Care Organization(not for profit)3.9%
8. Fanancial Services3.8%
9. Law/Legal Services3.2%
10. Wholesale3.2%

Methodology

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METHODOLOGY: Between late June and late August 2010, approximately 35,000 survey questionnaires were sent to defined contribution (DC) plan sponsors from the PLANSPONSOR magazine database, as well as to client lists supplied by DC providers; 5,929 total usable responses were received by the close of the survey on September 10, 2010. In order to qualify for rating in the survey, providers needed a minimum of 35 total client responses. In order to be rated in a particular asset category, a provider needed at least 15 client responses in the micro, small, or mid asset categories, and at least 10 responses in the large or mega asset categories. Quartiles for participant services and sponsor services were calculated in each asset category in which a provider qualified for a rating.

In addition to the data published here, customized research reports are available by provider, by market segment, by industry, and by region. For more information, contact Brian O’Keefe (bokeefe@assetinternational.com).

Micro (<$5mm)Participant ServicesSponsor Services  
1st Quartile 92.7%-96.4% 94.8%-98.3%
2nd Quartile 90.1%–91.7% 92.3%–94.5%
3rd Quartile 88.0%–89.9% 90.6%–92.0%
4th Quartile 79.2%–87.9% 79.7%–90.0%
Small ($5mm–$50mm)
1st Quartile 92.8%–97.8% 93.4%–98.6%
2nd Quartile 90.0%–92.2% 92.5%–93.3%
3rd Quartile 88.9%–89.5% 90.8%–92.1%
4th Quartile 86.4%–88.3% 86.4%–90.5%
Mid (>$50mm–$200mm)
1st Quartile 92.1%–93.9% 93.1%–94.4%
2nd Quartile 90.7%–91.9% 90.0%–92.0%
3rd Quartile 89.5%–90.6% 89.6%–89.8%
4th Quartile 82.5%–88.1% 86.2%–89.1%
Large (>$200mm-$1b)
1st Quartile 93.1%–94.9% 94.2%–95.5%
2nd Quartile 90.9%–92.6% 92.6%–93.5%
3rd Quartile 86.4%–89.1% 87.4%–89.2%
4th Quartile 77.7%–85.5% 83.0%–87.2%
Mega (>$1b)
1st Quartile 90.2% 89.6%
2nd Quartile 89.4%–89.7% 88.8%–89.3%
3rd Quartile 86.3% 86.6%
4th Quartile 85.4% 84.6%

Archive

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DEFINED CONTRIBUTION SURVEY - Provider Ratings

For nearly two decades, PLANSPONSOR's annual Defined Contribution Survey has been the most important industry benchmark, measuring and evaluating 401(k) and other DC providers according to feedback from their own clients. Major defined contribution providers are rated in the various client categories they serve, and benchmark information is collected for plan sponsors to gauge their plans against their peers.