Employers Adding 401k Plan Features to Drive Participation and Savings
SAN FRANCISCO, CA, September 8, 2011 -- Charles Schwab, a 401k provider to approximately 1.5 million company retirement plan participants, today released new insights into the growing number of employers providing their employees with value-added 401k plan features that help drive positive plan participation and savings behaviors. Key statistics include:
- 81 percent of employers now make 401k advice available to plan participants, compared to just 42 percent in 2005.
- 70 percent of employers currently include target date funds in their fund line-ups, compared to 57 percent in 2005.
- 41 percent of employers automatically enroll participants, up dramatically from just five percent in 2005. These figures are even greater among larger companies. At companies with more than 2,500 participants, 57 percent use automatic enrollment.
- 36 percent of employers using automatic enrollment are also using automatic savings increases, up from 14 percent in 2006, when Schwab's plan clients first began implementing automatic savings increases.
- More than two-thirds (68 percent) of employers provide a 401k matching contribution, down from a peak of 76 percent in 2006.
| Feature Adoption Rates (2005 through June 30, 2011) |
|
Feature |
2005* |
2006* |
2007 |
2008 |
2009 |
2010 |
6/30/2011 |
| Participant Advice |
42% |
56% |
58% |
62% |
70% |
80% |
81% |
| Target Date Funds |
57% |
62% |
62% |
65% |
68% |
70% |
70% |
| Automatic Enrollment |
5% |
14% |
24% |
33% |
35% |
39% |
41% |
| Automatic Enrollment and Automatic Savings Increase |
N/A |
14% |
24% |
30% |
35% |
36% |
36% |
| Employer Match |
73% |
76% |
75% |
72% |
67% |
68% |
68%** |
"The 401k plan is now the primary source of retirement savings for an overwhelming majority of Americans," noted Catherine Golladay, vice president of 401k participant services at Charles Schwab. "We see more and more employers taking this responsibility seriously and looking for ways to provide additional support for 401k participants. We are also gratified to see that employers are focusing more on those tools that clearly drive results, like advice, automatic enrollment and automatic savings increases."
About Charles Schwab
The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.2 million client brokerage accounts, 1.44 million corporate retirement plan participants, 754,000 banking accounts, and $1.65 trillion in client assets as of June 30, 2011. 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. 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. Independent investment advisors are not owned, affiliated with or supervised by Schwab. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com.
* Results for 2005 and 2006 do not include adoption rates of plans administered under the 401k Company platform.
** Estimated.
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