New Data Reveals Increase in 401k Plan Participation
SAN FRANCISCO, October 27, 2009 -- Charles Schwab today released new data showing the number of workers participating in 401k plans increased even as the stock market declined and the economy weakened. In addition, most 401k plan participants continued to receive matching contributions from their employer.
According to data taken from retirement plans serviced by Schwab, overall 401k plan participation increased four percentage points through the end of 2008, in the middle of the financial crisis, to 77 percent from 73 percent at the end of 2007.
The participation rate jumped even higher, to 84 percent from 77 percent, among plans that offer automatic enrollment programs. However, whether or not automatic enrollment was offered, participation rates generally increased across the board, particularly among small and mid-size companies.
Most Employers Still Offering Matching Contributions
Despite enormous pressure on many companies to cut costs, relatively few eliminated their 401k match among Schwab 401k plan clients. As of July 31, 2009, less than one in ten employers (9%) stopped making matching contributions according to Schwab data. Sponsors in some of the industry's most impacted by economic conditions, including manufacturing and retail, were more likely to suspend their match. Comparatively, no companies in the healthcare or wholesale industries suspended their match, according to the Schwab plan data. Overall, nearly seven in 10 (69%) employers are currently offering a 401k match.
"Our plan sponsor clients tell us that the employer match is one of the most important 401k plan features for employees and eliminating it is a last resort even in difficult economic times," said Robyn Alcorta, vice president of 401k client services for Charles Schwab. "Matching employee 401k contributions is important in keeping the 401k benefit competitive and driving high participation and savings rates, and employers tell us that these factors lead to a more productive and loyal workforce."
Most 401k Participants Continue to Avoid Hardship and 401k Loans
While the economic crisis of 2008 was serious, most participants in Schwab-serviced 401k plans resisted temptation to tap retirement savings. The number of people taking loans from their 401k plan actually decreased in 2008 to 5.67 percent from 5.91 percent in 2007. The number of people taking hardship loans increased, but only slightly, to 0.91 percent in 2008 compared to 0.8 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 7.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 667,000 banking accounts, and $1.36 trillion in client assets. 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. Named Highest in Investor Satisfaction by J.D. Power and Associates, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com.
###
Click here for more material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues on 401k plans.
This is a press release provided by the company or its representatives. 401khelpcenter.com, LLC is not the author of this release and is not associated or affiliated with any firm or organization mentioned unless otherwise noted. Use of any information obtained from this release is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.
