Other key findings of the study included:

Participation rates. Twenty-four percent of Vanguard plans have adopted automatic enrollment, up 3 points from 2009. Yet the 2010 plan participation rate was 74 percent, down 2 points from 2009. Increases in participation from the growing use of automatic enrollment were offset by participation declines caused by difficult economic conditions.
Contribution rates. The average deferral rate in 2010 was 6.8 percent and the median was 6.0 percent, unchanged from 2009. Yet average deferral rates were down from their peak in 2007 of 7.3 percent. About half of the decline was likely caused by economic conditions and half was attributable to increased adoption of auto enrollment. While auto enrollment increases participation rates, it can also lead to declining plan contribution rates because default deferral rates are typically set too low at 3 percent or less and participants do not tend to increase their deferrals on their own.
- Employee and employer contributions combined are also down modestly. This average contribution rate in 2010 was 9.7 percent and the median was 8.8 percent. The reasons are likely the same as above, in addition to the decline of some employer contributions during the low part of the recent economic cycle.

Low-cost investment options. With the current focus on plan fees, more plan sponsors are interested in offering an "index core," a comprehensive set of low-cost index options that span the global capital markets. In 2010, 40 percent of Vanguard plans offered a set of options with an index core, making the design available to about half of all Vanguard participants.
Loans. New loan issuance rose in 2009 and 2010, returning to prerecession levels of 2005. In 2010, 18% of participants had a loan outstanding.
Hardship withdrawals. The number of hardship withdrawals grew 47% during the 2005–2010 period. The 2.2 percent of participants taking hardship withdrawals in 2010 is still low on an absolute basis.
Distributions. The majority (70 percent) of participants who left their employer in 2010 and were eligible for a distribution preserved their plan assets for retirement by remaining in the plan or rolling over their savings to an IRA or new employer plan. In terms of assets, 92 percent of all plan assets available for distribution were preserved.

Instant Insights /

More 401(k) participants using automatic investment programs