Stocks Still K plan Investment of Choice

November 4, 2002 ( - Despite numerous surveys showing large asset flows out of stocks, equities are still the largest asset class in 401(k) accounts, according to a new study.

The Deloitte & Touche study found that 28% of k plan assets were in domestic equities while a fifth of assets are in company stock.   A quarter of assets are in stable value.

The survey found that 85% of plans have formal mutual fund selection processes and three quarters of the plans have formal investment policies. Half of plans evaluate their investments on a quarterly basis while 26% perform such a review once a year.

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Also according to the survey:

  • highly compensated workers save 6% to 8% in their plan while non-highly compensated employees save 4% to 6%
  • some 37% of respondents allow new employees immediate K plan access. About 11% use automatic enrollment.
  • some 94% of employers offered matching plan contributions
  • nearly 90% of plans with a match allow participants to direct the investment of the match. Among the 11% of plans in which the employer directs the match investment, 77% of those plans invest the match in company stock. About a fifth of the plans said they offered company stock as an investment.
  • while employers are more likely to pick up fees for general expenses, participants end up paying for individual services such as loans or investment advice. For example, 68% of plans impose a loan fee on employees while only 10% of plans put that burden on the employer.   That compares with 62% of plans paying recordkeeping fees while 8% impose those fees on participants.
  • nearly a third of respondents say they’ve swapped out a fund from their plan because of poor performance in the last year.

The survey covered 823 companies.