Cowden Associates Reveals State of the Region's 401k Plans

PITTSBURGH, PA, August 16, 2007 -- Cowden Associates, Inc., the region's leading independent actuarial and employee benefit consulting firm, today presented results from its first Tri-State 401k Plan Sponsor Survey. The results identified areas of 401k plan sponsorship and participation in need of improvement as the plans emerge as America's primary retirement vehicle.

The survey provides a baseline for measuring the effectiveness of the Pension Protection Act, which was passed to make participation in 401k plans easier. In light of a recent federal court decision to change the way investment brokers must provide investment recommendations to 401k plans, the survey results also reveal the prevalence of brokers in the region who provide investment support to plan sponsors. In addition, survey data show how well regional employers understand their plans and responsibilities as plan sponsors.

More than 100 employers from Pennsylvania, Ohio and West Virginia participated in the survey.

"With the 401k plan emerging as America's primary retirement plan, it is critical for plan sponsors to understand how to build an effective plan," said Jim Bartoszewicz, executive vice president of Defined Contribution & Investment Advisory Services for Cowden Associates. "In fact, employers as plan sponsors are bound by law to support their employees' retirement planning."

"This survey represents a baseline to measure future improvement in 401k plan sponsorship and participation. It also illustrates where the greatest needs are to achieve strong retirement plans."

The following is a sample of findings from plan sponsor survey responses.

• 50 percent report that their employees defer an average of 5 to 6 percent of their pay to their plans (although studies indicate the target deferral rate should be 10 percent for a comfortable retirement income).
• Fewer than 25 percent automatically enroll employees in their 401k plans.
• Fewer than 10 percent periodically increase the deferral percentages that employees can contribute to the plan.
• 44 percent use registered investment advisers to select plan investment options.
• 35 percent change plan investment options every two to five years.
• 97 percent are comfortable that they are meeting their fiduciary responsibilities.
• 50 percent do not have an Investment Policy Statement or do not know what theirs includes.

"Based on our experience and understanding of defined-contribution plans, we believe the state of 401k plans in the region is not as bleak as the data might indicate," Bartoszewicz said. "When such a strong focus is placed on an issue for the first time, it takes a period of transition before improvement can be identified. Future surveys will continue to measure the effectiveness of the Pension Protection Act and other factors affecting 401k retirement plans over the coming years."

About Cowden Associates, Inc.

Cowden Associates is a Pittsburgh-based consulting and actuarial firm with a dedicated and experienced team of professionals with extensive experience in health and benefits, retirement, plan design, compensation, employee communications, benefits enrollment, actuarial and technology services. The firm is committed to providing the highest level of service through industry- leading professionals with experience and expertise equal to or greater than typically expected at the largest national firms. Cowden Associates is a charter member of United Benefit Advisors (UBA), an alliance of the premier independent benefit advisory firms in the nation.

For more information, visit http://www.cowdenassociates.com or call 1-888-889-9432.

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