Defined contribution plans are in many ways back to pre-recession levels, according to a survey released Thursday by the Plan Sponsor Council of America.
The 56th Annual Profit Sharing and 401(k) Survey reported that in three key areas – participation rate, savings rate and company contributions – plans in 2012 met or exceeded levels they had attained before the market crash in 2008.
The survey found that 87.6 percent of eligible employees have a balance in their plan and that 80 percent of plan participants made contributions in 2012; the average savings rate of participants is 6.8 percent of pay, up from 6.2 percent from 2010; and 95.3 percent of companies made promised matching contributions, up from 85 percent in 2010. In addition, the average matching contribution rose from 3.7 percent in 2010 to 4.5 percent last year.
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"Those critical of the DC system in the past thought that the system would collapse during a sharp economic downturn," Bob Benish, PSCA's executive director, said in a statement. "They were wrong. Was the system impacted the same way everything else in the economy was? Sure, but it is recovering and becoming stronger as both companies and participants are refocusing on saving and looking at more holistic approaches to financial wellness."
Almost all plans (97.5 percent) allow participants to decide how to allocate their funds. The average number of investment choices per fund is 19. The most common types of funds offered include actively managed domestic equity funds (85.9 percent of plans); actively managed international equity funds (82.7 percent); indexed domestic equity funds (80.3 percent); and actively managed domestic bond funds (77.3 percent).
The survey was based on an examination of 686 plans with 10.3 million participants and $769 billion in plan assets. Plans ranged in size from those with less than $2 million in assets (9.2 percent) to those with more than $100 million (44 percent).
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