The second annual 401(k) Plan Benchmarking Report from ALM
Intelligence/Judy Diamond Associates finds a clear “disparity between the
quality of 401(k) plans in white-collar and blue-collar industries.”
Similar to conclusions drawn by the latest PLANSPONSOR DC Survey, the benchmarking report suggests “there are
meaningful differences in the amount of retirement income a worker can expect
to earn based on their industry and the size of their employer.”
“Micro-sized companies with between two and 10 employees
tend to have higher account balances and more generous employer contributions
than any other size cohort we looked at,” researchers report. “This holds true across industries, though
there is also a correlation between white collar industries and average account
balance. People who make more are, simply put, capable of saving more.”
The analysis shows, after ranking industries using a variety
of criteria, Certified Public Accountants, as an industry, had the highest
median plan score, while the legal and insurance industries had the second- and
third-highest scores, respectively.
“The educational services industry was ranked last, followed
by accommodation and food services,” the report says.
Looking broadly at the 401(k) landscape, median
participation rates among 401(k) plans “in a broad spectrum of industries are
“None of the 26 examined industries has a median
participation rate of less than 86%,” the report suggests, “indicating that the
majority of employers understand the necessity of encouraging employee
participation in their 401(k) plans.”
The report is based on 2015 plan-year data, and “as in 2014,
the average 401(k) plan rate of return did not vary significantly based on
employer size or industry.” Researchers say this finding is “encouraging,
because it suggests that most employers offer good-quality investment options.”
Interestingly, the analysis
shows 401(k) plans in the financial advice/investment activities industry have
the second-lowest median rate of return. At the same time, plans offered by consultants
have the lowest median employee longevity among the 26 surveyed industries.
“This suggests that many
consultants are moving between firms, or starting their own companies and then
returning to larger firms after a few years,” the report says.
Information about obtaining ALM
Intelligence/Judy Diamond Associates research is available here.