Personalized Statements Increase 401(k) Participation

February 8, 2001 ( - Employees who receive personalized statements contribute 0.85% more of their salary to the 401(k) plan on average, compared with employees who don't receive this information, according to a survey from Watson Wyatt.

While small, this can mean a significant difference in retirement savings. For example, a 32-year-old employee earning $35,000 today would have an additional $73,415 in savings at age 62. This assumes a 7% return on investment, as well as annual raises of 5% per year.

Companies which used personalized statements to inform employees about their 401(k) plan had an average 6% higher participation rate compared with those that don’t.

The survey also found that employers who communicate “at least quarterly” on such issues as the principles of the time value of money have a 4% higher employee participation rate than companies that communicate this information less frequently.

“Many employers underestimate the importance of communications in helping employees make the most of their retirement plan,” said Greg Metzger, director for defined contribution consulting at Watson Wyatt. “This research begins the process of helping them quantify that importance.”

The company surveyed nearly 300 US employers, representing 2.5 million full-time and part-time employees, about their sponsored-retirement plan programs.

For more information about the survey, or to take the survey online, go to: