The Principal Unveils Comprehensive Retirement Plan Report
DES MOINES, IA, October 4, 2011 -- The past year marked an evolution of retirement trends, attitudes and behaviors among retirement plan sponsors and participants from a recovery mindset to a discovery mindset: what they need to do to reach their long-term goals.
This is according to The Total View 2011, a new report from the Principal Financial Group(R) that analyzes calendar-year 2009 and 2010 data from retirement plans with services provided by The Principal(R) and third-party research. The report is geared toward plan sponsors and financial professionals to help them track retirement trends and benchmark their plans.
"We're seeing participants shift their focus from getting back to where they were to taking steps to get to where they need to be to reach their financial dreams," said Barrie Christman, vice president of individual investor services at The Principal. "That's why we've built this year's report around best practices for 'retirement readiness': enhancing participant engagement to help influence more successful outcomes."
Some key findings from The Total View 2011 include:
- Education meetings help drive better outcomes -- Plans that included Principal Retire Secure(SM), which provides one-on-one planning sessions, saw higher participation and deferral rates from participants than those without Retire Secure (71.0 percent participation and 7.0 percent deferral rate compared to 59.6 percent participation and 6.8 percent deferral).
- Access to a group meeting drove up participation rates by 5.5 percentage points over those who did not have access (64.5 percent vs. 59.0 percent).
- Plan design features improve savings behavior -- Plans that offered automatic enrollment and automatic escalation features had the highest participation rate at 78 percent, more than 19 percentage points higher than those without these features.
- Nearly twice as many participants reached an overall contribution rate -- including any employer match -- greater than 11 percent when their employers' plan default was 6 percent rather than 3 percent (61 percent vs. 32 percent).
"In order to help ensure sufficient retirement income, we believe most retirement plan participants should be saving 11-15 percent of their pay--including any employer match--throughout an entire working career," Christman said.
- Providing multiple plan types bumps up participation and savings rates -- Participation in defined-contribution plans is 11-13 percent higher among highly compensated employees and 3-5 percent higher for non-highly compensated employees when combined with a nonqualified retirement plan versus a standalone defined-contribution plan.
- Average salary deferral percentages and account balances are also higher for both highly compensated employees and non-highly compensated employees when the two plans exist.
The Total View is the only report of its kind that covers all of the core retirement plan designs: defined contribution, including 401k and 403(b); defined benefit; nonqualified; and employee stock ownership plans. The report includes benchmarks on trends among approximately 37,000 retirement plans with services provided by The Principal to 3.7 million eligible participants representing nearly $123 billion in assets under management.
The Total View 2011, along with a "Fast Facts" report summary and video outlining key trends, is available at www.principal.com/totalview . 2011 marks the seventh year The Principal has produced The Total View.
For more news and insights from The Principal, connect with us on Twitter at http://twitter.com/ThePrincipal .
About the Principal Financial Group
The Principal Financial Group(R) (The Principal (R))(1) is a retirement and global investment management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500(R), the Principal Financial Group has $335.8 billion in assets under management(2)and serves some 16.5 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com .
(1) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
(2) As of June 30, 2011.
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