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Where Do you Go for Financial Advice?
According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010, nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42% in 2005. Additionally, 38% of employers now automatically enroll workers in these programs, compared with just 5% in 2005 (before the passage of the Pension Protection Act of 2006). Schwab notes that among companies with more than 2,500 participants, more than half (53%) use automatic enrollment. More than a third (37%) of employers using automatic enrollment are also using automatic savings increases, more than twice as many as did in 2006 (14%), when Schwab’s plan clients first began implementing automatic savings increases. More than three-quarters (76%) of employers currently include target date funds in their fund line-ups, compared to 57% in 2005. One area where things haven’t made such healthy strides; Schwab notes that 69% of employers provide a 401(k) matching contribution, down from a peak of 76% in 2006 – but up from 67% at the end of 2009. Feature Adoption Rates (2005 through June 30, 2010) Feature 2005 2006 2007 2008 2009 06/30/2010 Participant Advice 42% 56% 62% 66% 74% 74% Target Date Funds 57% 62% 70% 73% 75% 76% 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
According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010, nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42% in 2005.
Additionally, 38% of employers now automatically enroll workers in these programs, compared with just 5% in 2005 (before the passage of the Pension Protection Act of 2006). Schwab notes that among companies with more than 2,500 participants, more than half (53%) use automatic enrollment.
More than a third (37%) of employers using automatic enrollment are also using automatic savings increases, more than twice as many as did in 2006 (14%), when Schwab’s plan clients first began implementing automatic savings increases.
More than three-quarters (76%) of employers currently include target date funds in their fund line-ups, compared to 57% in 2005.
One area where things haven’t made such healthy strides; Schwab notes that 69% of employers provide a 401(k) matching contribution, down from a peak of 76% in 2006 – but up from 67% at the end of 2009.
Feature Adoption Rates (2005 through June 30, 2010)
Feature
2005
2006
2007
2008
2009
06/30/2010
Participant Advice
42%
56%
62%
66%
74%
Target Date Funds
57%
70%
73%
75%
76%
Automatic Enrollment
5%
14%
25%
34%
37%
38%
Automatic Enrollment and Automatic Savings Increase
N/A
24%
30%
35%
Employer Match
72%
67%
69
Nevin E. Adamseditors@plansponsor.com
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