The defined contribution plans of the country's Fortune 100 held $776 billion in assets at the end of 2013, a more than 20 percent increase over the previous year, thanks in large part to strong stock market returns, according to Towers Watson.
Of the $130 billion increase in total assets, employees contributed $30 billion, while their employers matched another $17 billion.
The Fortune 100's plans paid out $53 billion in distributions, and $6 billion in expenses and transfers, while generating $129 billion in investment returns for the year; 16 percent of plans returned more than 25 percent.
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Most of the companies — 70 percent — offer only a defined contribution plan to new employees. Half of those offered a matching contribution, as well as non-matching contributions, often related to company performance, and only three of the companies in the Fortune 100 didn't provide any type of match.
Of the 30 percent of companies offering defined benefit plans to new employees, only 23 percent offered non-matching contributions to DC plans. But the study showed that when several companies froze or closed their DB plans in 2013, sponsors began offering non-matching contributions, presumably to offset the loss of the defined benefit for workers.
About half of the plans automatically enrolled employees in 2013, and another 58 percent of the plans had an automatic escalation feature.
The typical default deferral rate in the auto-enrolled plans was 3 percent, made by 49 of the Fortune 100 plans, though 16 plans defaulted 6 percent, and two plans defaulted 10 percent of pay.
In general, plans that auto-escalate deferrals did so by 1 percent a year. Most frequently, sponsors would halt escalation once deferral rates hit 6 percent.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
