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Schwab Survey Says Automatic Features, Advice Continue to Gain Ground
A new survey finds continued expansion of participant-friendly plan features.
According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010, nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42% in 2005.
Additionally, 28% of employers now automatically enroll workers in these programs, compared with just 5% in 2005 (before the passage of the Pension Protection Act of 2006). Schwab notes that among companies with more than 2,500 participants, more than half (53%) use automatic enrollment.
More than a third (37%) of employers using automatic enrollment are also using automatic savings increases, more than twice as many as did in 2006 (14%), when Schwab’s plan clients first began implementing automatic savings increases.
More than three-quarters (76%) of employers currently include target date funds in their fund line-ups, compared to 57% in 2005.
One area where things haven’t made such healthy strides; Schwab notes that 69% of employers provide a 401(k) matching contribution, down from a peak of 76% in 2006 – but up from 67% at the end of 2009.
Feature Adoption Rates (2005 through June 30, 2010) | ||||||
Feature | 2005 | 2006 | 2007 | 2008 | 2009 | 06/30/2010 |
Participant Advice | 42% | 56% | 62% | 66% | 74% | 74% |
Target Date Funds | 57% | 62% | 70% | 73% | 75% | 76% |
Automatic Enrollment | 5% | 14% | 25% | 34% | 37% | 38% |
Automatic Enrollment and Automatic Savings Increase | N/A | 14% | 24% | 30% | 35% | 37% |
Employer Match | 73% | 76% | 75% | 72% | 67% | 69 |
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