Of the plan sponsors that either lowered or suspended
their match, 27% have already reinstated the match or say they plan to
reinstate it in 2010, according to a press release. This trend is especially
true with larger plans of 5,000 participants or more, with 44% of those
employers having already reinstated their match or planning to in the next
The announcement said a review of deferral rates in the
first quarter of 2009 showed that in plans where the company match was
suspended, participants were nearly twice as likely to decrease their deferral
rates. In Fidelity recordkept plans with a company match suspension, 11% of
active participants decreased their deferral rates versus only 6% of active
participants in plans where there were no changes made to the company matches
during the same period.
The Fidelity review also found that as equity markets
continued to rally in the third quarter, the average 401(k) account balance
rose nearly 13% to $60,700 from the end of quarter two, and increased 28% from
the end of the first quarter low of $47,500. The two consecutive quarters of
gains in the equity markets also had a positive impact on the longer-term
investment returns for 401(k) participants.
Using a personal rate of return (PRR) based on a calculation of an account’s investment time-weighted performance during a given period of time, excluding contributions, withdrawals, loans, and certain other types of account activity made either by the participant or plan sponsor, Fidelity found that as of September 30, 2009, the median one-year PRR for participants was a positive 0.4%. Over the past five and 10 years, participants had annualized median PRRs of 3.2% and 1.9%, respectively.
The Fidelity data is based on accounts of more than 11 million participants in the more than 17,000 plans.