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Plan Sponsors Enhance Matching Contributions and Formulas


NEW YORK, NY, March 3, 2014 -- New analysis of historical survey results reveals that plan sponsors have enhanced key features of their retirement benefits over the last several years. Strategic Insight, an Asset International company, examined plan sponsor survey results from its affiliate PLANSPONSOR magazine over years 2009 through 2013. Plan design features that saw aggregate improvements include employer matching contributions, formulas, schedules and vesting.

The number of plan sponsors not offering a match has significantly decreased over the past five years. In 2009, 26% of plan sponsors said they did not offer a match. By 2013, only 10% of plan sponsors did not offer a match, reflecting a decrease by nearly two-thirds. "Increasing percentages of employers offering matching contributions illustrate plan sponsor support in providing retirement security," said Bridget Bearden, Strategic Insight's head of defined contribution retirement research.

Strategic Insight

The survey fielded in 2012 found that 68% of employers offering a match made no change to their contribution during the previous five-year period. However, 13% of plans sponsors changed the matching formula resulting in a higher contribution rate. Only 4% of plan sponsors said they had yet to reinstate a suspended or reduced match in 2012.

Increasing Generosity of Match Formula

Plan sponsors reported more generous matching formulas in 2013 compared to prior years. In 2013, one in five plan sponsors indicated they matched "100% or more of participants' first 6% of salary." Employers matching "50%-99% of the first 6%" increased from 52% in 2009 to 58% in 2013. As plan sponsors gradually improved their match formula, the occurrence of less attractive matching formulas has declined. In 2009, 31% percent of plan sponsors indicated their match was "less than 50% of the first 6%." By 2013, the incidence of a "less than 50% match" declined to 22%.

Employee Contributions Often Matched Within Three Months

Over 80% of plan sponsors match contributions within three months. The most common match frequency in 2013 was "each pay period", which 77% of plan sponsors reported. The percentage of plan sponsors that match annually declined from 15% in 2012 to 14% in 2013. Bearden noted that "better matching formulas and schedules reflect a commitment to helping participants accumulate savings in a timely and efficient manner. While these factors are critical for creating a strong defined contribution plan, employers must also be prepared to take more direct steps to educate and encourage their employees to become better savers."

Small Improvement in Vesting Schedules

Vesting refers to the accrual process of employer-paid contributions to the employee's retirement account. A participant is fully vested when they have 100% ownership rights of the assets. Over the last several years, more plan sponsors have adopted immediate vesting and moved away from prolonged vesting schedules. The percent of plan sponsors that vest employees immediately upon enrollment increased from 29% in 2010 to 33% in 2013. On the other end of the spectrum, vesting as a long-term retention tactic mildly moderated over the same period. The percent of plan sponsors that vest employees after more than five years declined from 19% in 2010 to 15% in 2013.


Every year, PLANSPONSOR magazine fields the most representative survey of its kind, with participation from thousands of defined contribution plan sponsors across various sizes, industries, and regions. The most recent survey fielded in 2013 captured the sentiment of more than 5,000 plan sponsors.

About Strategic Insight

For more than 20 years, Strategic Insight has been at the forefront of thorough, unbiased mutual fund industry research and business intelligence. We provide our variety of products and services to a range of clients, including executives from more than 200 investment management and insurance companies, distributors, investment banks, hedge funds, consultants and law firms. Strategic Insight's parent company, Asset International, delivers critical, cutting edge data, research and marketing programs to mutual fund companies, banks, asset managers and insurance companies worldwide. The company has offices in New York, Boston, Hong Kong, London, Melbourne, Toronto and Stamford, CT. For additional information, visit www.SIonline.com.


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