In its 55th Annual Survey of Profit Sharing and 401(k) Plans, the Plan Sponsor Council of America (PSCA) found that more companies are contributing to their plans and at higher rates than at any point over the past several years. The survey found that the number of companies making matching contributions rose from 91 percent in 2010 to 95.5 percent in 2011. Of particular note is that small companies are back to matching 92.8 percent of the time, up nearly 10 percent from 2010. The percentage of eligible employees making plan contributions rose to 79.5 percent in 2011, up from 76.9 percent in 2010.
The report also showed that the average amount of contributions has also increased with the average company contribution increasing to 4.1 percent of pay in 2011 from 3.7 percent in 2010 and the average participant deferral rate increasing from 6.2 percent to 6.4 percent during the same time span.
“The continued upward trend in participation and contribution levels is a result of the ongoing, sustained efforts of plan sponsors to effectively communicate their plan and educate their participants on the benefits of enrolling and staying in the plan,” said Bob Benish, PSCA’s Interim President and Executive Director. “Sponsors are looking beyond just increasing participation rates and are embracing plan design features that will make the plan more attractive to employees, while also making the plan more effective at increasing overall retirement readiness and financial health.”
Other survey highlights include:
• Roth after-tax contributions are permitted in 49 percent of plans, up from 45.5 percent in 2010.
• Auto enrollment is used in 45.9 percent of plans, up from 41.8 percent in 2010.
• 15.5 percent of plans allow company stock as an investment option.
• 88.4 percent of employees are eligible to participate in their company’s contribution plan.