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Data & Research June 10, 2009
Few Schwab-Administered 401(k) Plans Cut Match
The percentage of employers with a 401(k) plan at Charles Schwab offering a match fell from 78% in 2007 to 70% last year, according to new Schwab data.
Reported by Fred Schneyer
A Schwab news release said another 8% of plan sponsors with Schwab-administered plans had reduced their match as of March 31.
In general, Schwab said, overall 401(k) employee participation in Schwab plans increased to 77% in 2008 from 73% in 2007, largely due to employers’ continued commitment to automatic enrollment programs heading into 2008. Plans with between 500 and 1,000 participants displayed the highest participation rate at 88%, according to Schwab.“Our plan sponsor clients remain committed to 401(k)s even though many of them are facing budget constraints across their businesses,” said Robyn Alcorta, Charles Schwab vice president of 401(k) plan services, in the release. “While we are seeing some employers that have had to make cuts, including on the employer match, most have indicated that they intend to reinstate these features just as soon as they can.”
The Schwab data also indicated:
- The market and economic environment in 2008 does not appear to have driven plan participants to make significant changes in their 401(k) asset allocation. The most significant change in plans serviced by Schwab in 2008 compared to 2007 was a 7% shift of assets from large cap (decreased an average of 4.52%) and international holdings (decreased an average of 2.28%) moving primarily into stable value (increased an average of 2.90%) and fixed-income products (increased an average of 3.79%).
- Comparing the third and fourth quarters of 2008 to the third and fourth quarters of 2007, the average percentage of participants taking hardship withdrawals in plans serviced by Schwab remained under 1% over year (.55% compared to .47%). The number of people taking loans from their 401(k) plans actually decreased to 5.67% in 2008 from 5.91% in 2007.
Plan Feature Data
According to data taken from Schwab retirement plan clients, many employers continued to increase the features and offers available to plan participants in 2008, with notable increases in plans providing 401(k) advice and a Roth 401(k) option.
62%Feature % of plans offering in 2007 % of plans offering in 2008* Participant 401(k) advice 58% Target/Life cycle funds 62% 65% Auto enrollment 24% 32% Auto savings increase 6% 10% Roth 401(k) 37% 45% Employer match 78% 70%
*Employer match data through March 31.