Retirement Plan Participants Showed Resilience in Tough Times

Alight research into participants’ 401(k) activity in 2021 shows workers are still investing in the future. 

Retirement plan sponsors can support participants’ resilience through COVID-19 and the attendant labor-market shifts by focusing on essential plan improvements and taking account of progress.  

A recent study, “Alight 2022 Universe Benchmarks: How workers are saving and investing in defined contribution plans,” finds that regarding retirement savings, workers have remained steadfast. Defined contribution plan participation increased in 2021 across almost every defined contribution plan key performance indicator, Alight’s research shows.

Average plan participation increased to 84%, compared to 83% the year before and 80% in 2018, while the average contribution rate increased to 8.4% from 8.3%. The average plan balance reached an apex of $144,280; at the beginning of 2021, the average was $130,330.

“2021 was a year of resilience,” Alight states. “Eager to leave behind the lockdowns and social unrest that defined 2020, Americans met the new year with optimism and a willingness to adjust to a new normal.”

Alight explains, “because of the [stock market] bull run, people who have been in plans for the past five years have seen annualized median returns of 12.2%.”

The research was based on more than 100 plans covering 3 million eligible participants.

Alight also found that the portion of retirement plan participants allocating to a target-date fund has plateaued after increasing over successive years. “Before 2020, the percentage of people saving to target-date funds steadily grew to 76%,” Alight states. “Since then, the percentage slipped to 72%.”

Plan sponsors with participants who have taken a loan from their defined contribution plan were at record lows, as only 19% in 2021 had an outstanding loan—the lowest level since Alight began tracking in 2000—whereas the percentage was near 30% a decade ago. Retirement plan hardship withdrawals also decreased in 2021, when 5% of retirement plan participants took money out.

“While this is fewer than half the number of withdrawals taken in 2020, much of the variation can be chalked up to the anomaly of the access provided by the CARES [Coronavirus Aid, Relief, and Economic Security] Act in 2020,” Alight states.

The CARES Act created an emergency retirement plan distribution option for coronavirus-related distributions.   

Alight also offers suggestions from the research for plan sponsors to bolster plans’ participation, contributions and investments, and participants’ trading behavior. 

Plan sponsors’ tactics to support participation:


  • Promote diversity, equity and inclusion in the plan
  • Add automatic enrollment, if it’s not in place already
  • Help workers prioritize retirement savings


Plan sponsors’ tactics to support contributions:

  • Plan for pending legislation, including SECURE [Securing a Strong Retirement] Act 2.0, which could help increase savings rates
  • Promote tax diversification through Roth options for participants, because Roth accounts often allow for tax-free withdrawals in retirement
  • Raise the ceiling on automatic contribution escalation

Plan sponsors’ tactics to support investments and trading behavior:

  • Add a self-directed brokerage window
  • Monitor TDF usage
  • Provide managed accounts

Alight’s report includes methods plan sponsors can use to bolster the plan for plan balances and loans and withdrawals, and post-termination behavior.