A new data analysis by Charles Schwab indicates that more employers are adding key features to their 401(k) plans, including a return to 2008 “pre-financial crisis” levels for matching contributions.
Some 73% of employers provided 401(k) matching contributions in 2011, according to Schwab, up from 68% in 2010.
Additionally, 83% of companies now offer participants 401(k) investment advice, a record high and nearly double the amount from 2005, when Schwab started tracking the figure.
“We are encouraged that more employers are recognizing the powerful impact these plan features can have on driving positive outcomes for their employees, particularly the impact of advice,” says Steve Anderson, senior vice president of Schwab Retirement Plan Services. “We've seen the difference 401(k) advice can make for individuals, and we are glad to see more employers are offering it.
“Our preliminary analysis so far this year indicates client adoption of these plan features is consistent with 2011,” Anderson says.
Schwab claims that workers who use independent, professional advice services inside their 401(k) plan tend to save twice as much and were better diversified.
The data further shows that 42% of employers auto-enrolled employees into their 401(k) plan in 2011, up from only 5% in 2005 and 39% in 2010. Among those who auto-enroll, 40% use auto-increase, also an increase.
“Some employers have been reluctant to implement automatic features out of concern that their employees would react negatively, but the facts don't support that concern,” Anderson says. “Last year, 92% of employees who were automatically enrolled in their plan stayed enrolled and continued to save, and 82% of employees placed in an automatic savings increase program stayed with that program.”
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