401(k) Sponsors Increasingly Focused on Investments

November 29, 2011 (PLANSPONSOR.com) - PSCA’s survey, 401(k) and Profit Sharing Plan Response to Current Conditions, finds while companies are in the process of restoring contributions, they are also increasingly focused on plan investments.

Half of plans that suspended their matching contribution in the last four years have fully restored it.  Of all plans reported, 66.7% have maintained their matching contribution, 12.1% increased their match or added a matching contribution, 7.3% have fully restored suspended or reduced matches and 13.9% still have suspended or reduced matching contributions.   

Companies are focused on plan investments during this tumultuous economic period: 63.8% of plans changed their investment lineup in the last year, and 56.2% changed their investments in 2010.  Only 19.7% did so in 2009.   

“This is dramatic. I have not seen anything like this in 25 years of working with plan sponsors.” said David Wray, PSCA president. “That so many plans sponsors are reviewing and reworking their investment lineups demonstrates the importance they see in delivering the very best investment opportunity as part of the 401(k) plan benefit for their employees, especially in these unusual times.” 

Efforts to Help Employees  

Companies continue to help their employees understand their plans and investments, according to PSCA’s survey, 401(k) and Profit Sharing Plan Response to Current Conditions. More than half of plans increased employee education efforts in 2011, and 43% provided education specifically on market volatility.  

Eight percent of plans reported they added an automatic enrollment feature to their plan in the last year.  Nearly one-quarter of plans monitor whether participants are on track for retirement, including more than 40% of large plans.   

Almost 40% of plans reported an increase in plan participation, up from just 3.9% in 2009.  

The survey was conducted in October 2011 and reflects the responses from 523 401(k) and profit sharing plan sponsors from across the country.  

The full report is available here.