Schwab Releases Data on Employer and Worker 401k Behavior

SAN FRANCISCO, CA, June 10, 2009 -- Charles Schwab today released new 401k plan data indicating that while the economic downturn has impacted some aspects of employer and worker behavior in plans, both groups have largely stayed the course and remained committed to their plans. According to the data, overall employee participation in 401k plans serviced by Schwab increased in 2008 compared to 2007, and although the number of employers offering matching contributions declined in 2008 and into early 2009, employers continued to expand features available to plan participants.

Employers are keeping most 401k features on track. According to data taken from Schwab retirement plan clients, many employers continued to increase the features and offers available to plan participants from 2007 to 2008, with notable increases in plans providing 401k advice and a Roth 401k option.

                            Percent of plans  Percent of plans 
Feature                     offering in 2007  offering in 2008 
							
Participant 401k advice            58%              62% 
Target/Life cycle funds            62%              65% 
Auto enrollment                    24%              32% 
Auto savings increase               6%              10% 
Roth 401k                          37%              45%
Employer match                     78%              70%* 

*Employer match data through March 31, 2009 

Employer matching contributions show slight decrease. According to data for plans at Schwab, a significant majority of employers continued to offer a 401k match in 2008. Overall, 70 percent of employers in Schwab-administered plans offered a match through March 31, 2009, down eight percent from 78 percent in 2007. In addition, eight percent of plan sponsors working with Schwab had reduced their match as of March 31, 2009.

"Our plan sponsor clients remain committed to 401ks even though many of them are facing budget constraints across their businesses," said Robyn Alcorta, Charles Schwab vice president of 401k plan services. "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."

Participants remain engaged despite difficult markets. In 401k plans serviced by Schwab, overall plan participation increased to 77 percent in 2008 from 73 percent 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 (88 percent).

"Based on what we are seeing from participant behavior, the 401k continues to be a very important savings tool for many Americans," said Catherine Golladay, Charles Schwab vice president of 401k participant education and advice. "Understandably, we are seeing some slight decreases in individual savings levels given the pressures that many are feeling, but the vast majority of people are staying engaged in their plans and doing their best to continue saving."

Plan participants have not made large-scale changes in their 401k portfolios. The market and economic environment in 2008 does not appear to have driven plan participants to make significant changes in their 401k asset allocation. The most significant change in plans serviced by Schwab in 2008 compared to 2007 was a seven percent 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%).

Hardship and loan activity remain relatively unchanged. 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 one percent year over year (.55% compared to .47%). The number of people taking loans from their 401k plans actually decreased to 5.67 percent in 2008 from 5.91 percent in 2007.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of financial services, with more than 300 offices and 7.5 million client brokerage accounts, 1.5 million corporate retirement plan participants, 544,000 banking accounts, and $1.2 trillion in client assets as of April 30, 2009. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors.

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