2010 PLANSPONSOR DC Survey: Surprising Number of Employers Still Unsure How Much Their 401(k) Plans Cost

STAMFORD, Conn., Nov. 11, 2010 /PRNewswire/ -- According to the just-released annual PLANSPONSOR defined contribution survey, 401(k) participation rates this year were basically flat and plan sponsors remained unsure about target-date asset allocations and retirement-income offerings.

"In a very real sense, this has been a rebuilding year for many 401(k) plan sponsors and participants," said Nevin Adams, editor-in-chief of PLANSPONSOR. Nevertheless, he cautions, "there is a lot of work to do" to restore participant accounts and provide employees with the best possible opportunities to save for retirement.

Adams noted that many sponsors are still unsure whether the "glide paths" of many target-date funds provide participants with appropriate asset allocations, and a surprising number still aren't sure how much their 401(k) plans cost.

Here are a few of PLANSPONSOR's other findings:

Hardship withdrawal trends were encouraging. Slightly more than 2% of participants took a hardship distribution in the past year compared with 2.7% a year ago. Larger plans had about twice as many on a percentage basis as the smallest programs.

Deferrals Only 24.9% of plan sponsor respondents said that "all or nearly all" of their participants were deferring enough to take full advantage of the employer match, a reading that declines sharply with plan size.

Participation rates were roughly flat with a year ago. Responding plans reporting a combined participation rate of 71.5%, compared with 72.3% a year ago. The median participation rate also was lower: 75.0% in 2010, compared with 78% in last year's survey.

Automatic Enrollment The overall adoption rate of automatic enrollment programs by plans sponsors was slightly lower this year versus 2009. However, there was a discernible uptick in adoption at the largest sponsors (62.7% in 2010 versus 52.3% a year ago), and about a 10% increase in the number of mid-size and large programs. However, small and micro plans showed no change at all.

Matching contributions were offered by more than three quarters of the respondent plans, slightly higher than the 73.6% in 2009 but not enough to offset the 12.3% who, in last year's survey, indicated that they had recently eliminated the match/employer contribution. Meanwhile, more than half the "mega" plan respondents indicated a match equivalent to between 51% and 99% of 6% of salary. Only 37.9% identified that match level a year ago.

Financial Advice Nearly two-thirds of plan sponsor respondents -- and nearly half of the largest programs -- now rely on the services of a financial adviser. Programs in the large and mega segments were significantly more likely to claim that their adviser's fee arrangement was based on a flat fee/retainer (61% and 60%, respectively), while micro and small plans were more inclined to cite adviser fees based on plan assets (54.2%, and 59.6%, respectively). There was movement in every market segment away from fees based on plan assets and toward some form of flat-fee arrangement.

About PLANSPONSOR

PLANSPONSOR magazine, an Asset International, Inc., publication, is the nation's leading authority on retirement issues and benefits programs. PLANSPONSOR.com provides comprehensive news and commerce services dedicated solely to helping employers and financial advisers navigate the complex world of retirement plans and benefit programs on behalf of their employees or clients. For more information, see www.plansponsor.com.

About Asset International

Asset International is a privately-held provider of information and technology to global pension funds, asset managers, financial advisers, banking service providers, and other financial institutions in the private and public sector. Its industry-leading brands include Strategic Insight, SIMFUND, PLANSPONSOR, PLANADVISER, Global Custodian, and The Trade. The company was acquired in January 2009 by Austin Ventures and has offices in New York, Hong Kong, London and Stamford, CT.

SOURCE Asset International