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The survey also found the percentage of health care organizations offering a matching contribution in their DC plan has nearly doubled in six years—from 44% in 2006 to 79% in 2012. Offering investment advice is also becoming more widespread: 48% of plans offered it in 2006, 67% of plans offer it in 2012. Another positive sign of employers working to help employees save is the prevalence of on-site retirement plan representatives—46% of plan sponsors have either full- or part-time plan representatives on site, up from 39% in 2011. However, according to the survey, employee plan contribution rates have been static—and low—for ten years. More specifically, participants have contributed an average of just 5% to 7% of salary to their defined contribution plan annually for the past 10 years. Contributions amounts are rising, though; the average annual contribution amount fell from a six-year high of $5,205 in 2006 to a low of $3,505 in 2009, but has improved to $4,005 in 2012.Health care plan sponsors admit their number one challenge is to motivate employees to save adequately (80%). As a result, their measure for plan success is shifting; they said success is less about participation rate (down from 61% in 2011 to 56% in 2012 as “best indicator of plan success”) and increasingly about “income replacement ratio,” “amount saved by employee” and “deferral rate,” all of which, though small in percentage (6%, 7% and 7%, respectively), have at least doubled in importance since 2011. Together they represent a positive indicator that employers are placing greater emphasis on plan participant outcomes.
The survey also found the percentage of health care organizations offering a matching contribution in their DC plan has nearly doubled in six years—from 44% in 2006 to 79% in 2012. Offering investment advice is also becoming more widespread: 48% of plans offered it in 2006, 67% of plans offer it in 2012.
Another positive sign of employers working to help employees save is the prevalence of on-site retirement plan representatives—46% of plan sponsors have either full- or part-time plan representatives on site, up from 39% in 2011.
However, according to the survey, employee plan contribution rates have been static—and low—for ten years. More specifically, participants have contributed an average of just 5% to 7% of salary to their defined contribution plan annually for the past 10 years. Contributions amounts are rising, though; the average annual contribution amount fell from a six-year high of $5,205 in 2006 to a low of $3,505 in 2009, but has improved to $4,005 in 2012.