Many Participants Clueless About Contribution Rate: Survey

January 12, 2004 ( - Most plan sponsors aren't satisfied with their current participant education program, and no wonder, in light of the results of a new survey.

Charlotte, North Carolina-based investment education provider ICC Plan Solutions just completed a survey of plan sponsors for one of their TPA clients and found that just 11.9% were satisfied with their current education programs. Indeed, a recent online participant survey by ICC reveals that more than half (51%) of some 1,120 participant respondents said they didn’t even know how much they were contributing from their paychecks into their 401K plans.

Roughly a third (35%) of the plan sponsor respondents claim they receive a lot of questions whenever 401K statements are issued, and only 33% believe their participants could tell them what investments they currently have in their 401K. Nearly three-quarters (73.8%) of the plan sponsor respondents said their participants need help with basic investing knowledge.

Important Factors

Asked to identify the most important factors for an education/communication program, the top five responses were (more than one answer was permitted):

  • 90.5% – on-going updates & participant support,
  • 85.7% – explaining how to establish retirement goals,
  • 83.3% – providing basic knowledge of investing,
  • 82% – explaining specific investments available in the plan,
  • 81% – on-going updates and participant support.

Money appears to be no object – just 5% of plan sponsor respondents said they were concerned about the cost to implement a comprehensive participant education program. The survey included responses from more than 100 plan sponsors to the online survey.

Deferred Responses

As for participant deferrals, in addition to the 51% who didn’t know, when asked, “What percentage of your paycheck do you currently defer into your retirement savings?” the remaining respondents answered:

  • 27% – defer 4% or less
  • 21% – contribute between 5% and 9%
  • 1% – say they contribute 10% or more to their retirement plan.

The survey was conducted at , the main portal for “Essential Investment Strategies,” the retirement plan investment education system offered by ICC Plan Solutions.