Companies are restoring plan contributions that were reduced or suspended since the beginning of 2008, according to the Plan Sponsor Council of America. Many companies are increasing or adding new contributions to their plan.
A recent survey, "401(k) and Profit Sharing Plan Response to Current Conditions," found that half of plans that suspended their matching contributions in the last four years have fully restored it. The survey also found that 66.7 percent of companies surveyed maintained their matching contribution, 12.1 percent increased their match or added a matching contribution and 7.3 percent have fully restored suspended or reduced matches. Nearly 14 percent said they still have suspended or reduced matching contributions.
Companies also have started focusing more on plan investments because of the tough economic times, the report found, with 63.8 percent of plans changing their investment lineup in the past year and 56.2 percent changing their investments in 2010. Only 19.7 percent of those surveyed did so in 2009.
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"This is dramatic. I have not seen anything like this in 25 years of working with plan sponsors." said David Wray, PSCA president. "That so many plan sponsors are reviewing and reworking their investment lineups demonstrates the importance they see in delivering the very best investment opportunity as part of the 401(k) plan benefit for their employees, especially in these unusual times."
More than half of plans surveyed increased their employee education efforts in 2011 and 43 percent provided education specifically on market volatility. Almost 40 percent of plans reported an increase in participation and nearly one-quarter of plans say they monitor whether participants are on track for retirement, including more than 40 percent of large plans. Eight percent of plans reported that they added an automatic enrollment feature to their plans in the last year.
The survey was conducted in October and reflects the responses of 523 401(k) and profit sharing plan sponsors from across the country.
The Plan Sponsor Council of America, a national nonprofit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members.
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