Workers stashing money in 401(k) plans at record rates
Thanks to automatic enrollment and an improved stock market, employees are stashing money in employer-sponsored retirement plans at a record-high rate, according to a new Aon Hewitt study.
The consulting firm’s analysis of three million employees across 120 large companies shows that 75.8 percent of eligible employees participated in their company’s defined contribution plan — usually a 401(k) plan — in 2010. That’s the highest level since 2002, when the firm began tracking defined contribution plans, the company reported. In 2009, participation was 73.7 percent.
Other key findings:
* The average employee’s total plan balance was $76,020 at the end of 2010, while the median balance was $24,680. (Fidelity Investments, which is the nation’s largest administrator of retirement plans, recently reported that the average U.S. 401(k) retirement-savings account had a record $74,900 in assets as of March 31.)
* Nearly three in 10 plan participants contributed below the company match threshold, up slightly from 2009.
* Pretax contributions to defined contribution plans were unchanged from 2009 at 7.3 percent of pay, but still down slightly from pre-recession levels in 2007 (7.7 percent).
* Nearly one-third (29.4 percent) of plan participants contributed below the company match threshold, up slightly from 2009 (28.2 percent).
* When available, 60.1 percent of workers invested target-date funds or other pre-mixed portfolios.