Deferral rates remained flat at 6.9%, according to a Fidelity press release on its seventh annual Building Futures study. The study found that for workers who remained active in a 401(k) plan from 2004 to 2005, the average account balance grew by 13% from $63,000 to $72,000.
Automatic enrollment helped participation levels, as Fidelity found that 401(k) participation rates were 22% higher in plans with an automatic enrollment feature compared to plans without, the release said. Additionally, the study also showed that of nearly 100,000 employees automatically enrolled into a 401(k) plan last year, 87% remained in the plan throughout the year and 18% increased their deferral rates.
Automatic deferral increase programs also boosted savings. According to the study, although participants in automatic increase programs started with an average deferral rate below that of participants not in auto increase programs, their average deferral rate surpassed those of other participants (7.9% vs. 7.4%) after one or two years of increases.
Fidelity found that 83% of plans it administered now offer at least one lifecycle fund option, compared with 78% of plans that did so in 2004. The number of participants investing in a lifecycle fund also increased from 21% in 2004 to 25% in 2005.