Plan sponsors are often curious about what other sponsors are doing. “How many of your plans use automatic enrollment? And do they use auto escalation?” “Should we set the automatic enrollment default at 3% or some higher rate?” “Do our employees use loans more than other employers’ employees?” “Do you see a lot of plans adding the Roth option?”
The Plan Sponsor Council of America’s most recent annual survey provides some helpful data points that respond to many of those questions:
- The use of automatic enrollment continues to increase. 5% of plans use automatic enrollment.
- Plan sponsors are setting higher default percentages. More than half of automatic enrollment plans use a default rate higher than 3%.
- More plan sponsors are combining automatic enrollment with automatic increase. 3% use auto escalation.
- Fewer plans offered target date funds. Although the percentage of plan assets invested in target date funds increased to 19.8%, plans appear to have become less dependent on them; the percentage of plans offering target date funds fell from almost 70% to 63.2%.
- Participants took out more – and bigger – loans. Approximately 25% of participants had an outstanding loan, and the average loan ballooned by almost 50%, to over $9,000.
- A majority of plans permit Roth contributions. Nearly 60% of plans permit Roth contributions, but only 20% of employees took advantage of the option.
You can find more information about the survey and the Plan Sponsor Council of America by clicking here.