ICI and ISS Market Intelligence Report: 403(b) Plan Participants Benefit from Employer Contributions and Diverse Investment Choices

WASHINGTON, Aug. 27, 2025 /PRNewswire/ -- A new report from the Investment Company Institute (ICI) and ISS Market Intelligence (MI) finds that most employees in large 403(b) plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) receive employer contributions, giving them a significant boost towards long-term retirement security. The ICI/ISS MI Defined Contribution Plan Profile: A Close Look at ERISA 403(b) Plans, 2022 found that 85 percent of large ERISA 403(b) plans covering more than three-quarters of large ERISA 403(b) plan participants received employer contributions in 2022.

Employer contributions represent a significant portion of contributions flowing into large ERISA 403(b) plans, a trend that has remained relatively steady over the past decade. In 2022, 33 percent of plans with employer contributions offered automatic contributions, 56 percent offered simple matches, and 13 percent included both features. An additional 23 percent featured tiered matches and other types of employer contributions.

"Employer contributions play an important role in helping employees build toward their retirement saving goals," said Sarah Holden, ICI Senior Director of Retirement and Investor Research. "These contributions encourage employees to participate in the plan and stay invested for the long term, strengthening their financial security in retirement."

The study also found that large ERISA 403(b) plans offer employees a wide variety of investment options. In 2022, the average number of core investment options was 27. The most commonly offered options included domestic equity funds, international equity funds, domestic bond funds, and target date funds. Nearly all plans offered these types of investments, which were held in mutual funds or variable annuities. Mutual funds were the most prevalent, accounting for 67 percent of total plan assets. Fixed annuities and variable annuities each represented an additional 16 percent.

"Offering a wide range of investment options gives participants the flexibility to tailor their allocations to their individual retirement goals," highlighted Brooks Herman, Managing Director at ISS MI. "This variety is a key feature of 403(b) plans, with mutual funds continuing to serve as a reliable and widely used investment vehicle to help build investor confidence."

Other key findings of the study include:

• Target date funds have become more common in large ERISA 403(b) plans since 2009. In 2009, about half of large ERISA 403(b) plans included target date funds in their core investment lineups; this had risen to 90 percent of plans by 2022. Similarly, the percentage of participants who were offered core target date funds increased from 71 percent of participants to 90 percent between 2009 and 2022, and over the same period, the percentage of assets invested in target date funds increased from 7 percent to 33 percent.
  
  
• ERISA 403(b) plans represent an array of nonprofits, often hospitals or educational services. About half of ERISA 403(b) plan participants are in hospital plans, which held 38 percent of ERISA 403(b) plan assets in plan year 2022. Another 23 percent of ERISA 403(b) plan participants were in educational services, holding 44 percent of ERISA 403(b) plan assets.
  
  
• Index funds are widely available in large ERISA 403(b) plans and represented 39 percent of large ERISA 403(b) plan assets in 2022. Index funds held the greatest share of assets in the largest ERISA 403(b) plans: 47 percent of the assets of ERISA 403(b) plans with more than $1 billion in plan assets were invested in index funds.
  
  
• Equity funds accounted for the largest share of assets in large ERISA 403(b) plans. In 2022, 38 percent of large ERISA 403(b) plan assets were held in equity funds, 34 percent were held in balanced funds (with most of that being held in target date funds), and 6 percent were held in bond funds. Fixed annuities accounted for 16 percent of plan assets.

About the Study

The ICI/ISS MI Defined Contribution Plan Profile: A Close Look at ERISA 403(b) Plans, 2022 analyzes ERISA 403(b) plans in the Department of Labor (DOL) 2022 Form 5500 Research File, and more than 6,100 audited ERISA 403(b) plans in ISS Market Intelligence's MarketPro Retirement powered by BrightScope, which typically have 100 participants or more. A 403(b) plan is an employer-sponsored defined contribution (DC) retirement plan that enables employees of public schools and universities, nonprofit employers, and church organizations to make tax-deferred contributions from their salaries to the plan. This report analyzes 403(b) plans that are covered by ERISA and file Form 5500 with the DOL, generally sponsored by private-sector, nonchurch nonprofits.

About ISS Market Intelligence

ISS Market Intelligence (MI) is a leading provider of data, insights, and market engagement solutions to the global financial services industry. ISS MI empowers asset and wealth management firms, insurance companies, distributors, service providers, and technology firms to assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. Clients benefit from our increasingly connected global platform that leverages a combination of proprietary data, powerful analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry-leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards.

Complete results of the annual ICI/ISS MI study are posted on www.ici.org/research/retirement/dc-plan-profile. To learn more about ISS Market Intelligence, visit www.issmarketintelligence.com.

Contact: [email protected]

SOURCE Investment Company Institute