Company Matches on the Rise
There has been a rather notable increase, in the past year, in the number of retirement plans offering a company match, the 2016 PLANSPONSOR Defined Contribution (DC) Survey indicates. Among all plan sizes, 74.7% offer a match, up from 71.8% in 2015. However, there is a spread of 18 percentage points between micro and mega plans when it comes to this benefit; matches are offered at 67.0% of micro plans but 85.4% of megas.
Although stretch matches are now being rethought so as to encourage increased deferrals, the PLANSPONSOR survey still asks for sponsors to state their match in relation to a 6% deferral rate. As for the match amount most prevalent, it falls between 51% and 99% of the first 6% of an employee’s salary—selected by 29.1% of plans. That is followed by 50% of the first 6% of salary, selected by 16.5% of plans. Nearly one of every 10 sponsors—9.7%—contribute 100% of the first 6% of salary.
In terms of how frequently the matches are made, 71.9% of plans make them weekly, also indicating the sponsoring companies pay their employees every week. The next most common frequency is annually (13.7%). The other possibilities were chosen far less often: every other week (5.0%), twice a month (2.7%), quarterly (2.6%) and monthly (2.4%).
Does Your Organization Offer a Matching Contribution to Participant Accounts?
| Overall | Micro | Small | Midsize | Large | Mega | |
|---|---|---|---|---|---|---|
| Yes | 74.7% | 67.0% | 76.8% | 78.9% | 81.8% | 85.4% |
| No | 24.8% | 32.0% | 23.1% | 20.9% | 18.2% | 13.9% |
| Don’t know | 0.5% | 1.0% | 0.1% | 0.2% | 0.0% | 0.7% |
If You Provide a Match, What Is the Formula?
| Overall | Micro | Small | Midsize | Large | Mega | |
|---|---|---|---|---|---|---|
| > 100% of first 6% of salary | 2.9% | 3.3% | 2.9% | 2.2% | 2.9% | 3.1% |
| 100% of first 6% of salary | 9.7% | 8.9% | 7.7% | 7.4% | 14.0% | 19.7% |
| 51% – 99% of first 6% of salary | 29.1% | 38.8% | 25.7% | 22.9% | 24.8% | 26.3% |
| 50% of first 6% of salary | 16.5% | 13.2% | 18.0% | 22.2% | 17.5% | 10.1% |
| < 50% of first 6% of salary | 6.3% | 6.0% | 8.1% | 5.7% | 4.8% | 2.6% |
| Other | 35.5% | 29.8% | 37.5% | 39.7% | 36.2% | 38.2% |
How Frequently Are Matching Contributions Made to Plan Participants?
| Overall | Micro | Small | Midsize | Large | Mega | |
|---|---|---|---|---|---|---|
| Annually | 13.7% | 14.1% | 14.9% | 14.6% | 9.7% | 11.0% |
| Quarterly | 2.6% | 2.1% | 3.0% | 2.9% | 1.9% | 3.1% |
| Monthly | 2.4% | 2.9% | 2.8% | 1.9% | 1.6% | 1.3% |
| Twice a month (24 times a year) | 2.7% | 3.9% | 2.4% | 2.4% | 1.6% | 1.8% |
| Biweekly (26 times a year) | 5.0% | 5.7% | 4.7% | 3.8% | 7.2% | 3.1% |
| Weekly | 71.9% | 69.5% | 70.5% | 73.4% | 76.9% | 78.1% |
| Other | 1.6% | 1.8% | 1.8% | 1.0% | 1.2% | 1.8% |