2016 PSCA Survey Highlights 403(b) Plan Trends
DES MOINES, IA, August 18, 2016 -- Non-profit organizations and their employees are each doing their part to boost retirement savings and help improve participant outcomes, according to the 2016 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA).
The eighth annual benchmarking survey of 403(b) plans, sponsored by Principal Financial Group®, shows upward trends in deferral rates, employer matches and adoption of automatic enrollment.
Participants continue to steadily increase their deferral rates and are now saving 6.2 percent of pay, up from 5.4 percent five years ago. Employers are also contributing more -- the average match now is 4.6 percent of pay, up nicely from last year's 3.8 percent.
"Last year's most significant finding was the jump in the number of organizations making contributions to the plan. And this year we see a boost in the amount those employers are contributing," said Hattie Greenan, PSCA's director of research and communications. "These increases are good news in terms of helping improve participant outcomes, or how well savers can be prepared to afford a secure retirement."
The number of non-profits using automatic enrollment increased, now up to 19 percent of plans compared to 16.3 percent last year. Though automatic enrollment is rising, nearly 75 percent of plan sponsors surveyed are enrolling their employees at a rate of 3 percent of pay or less.
"We know employers that adopt automatic features in their plans see significant improvement in the savings levels of their workers," said Aaron Friedman, national tax-exempt practice leader at Principal®. "But we know from experience that these features tend to work best when the motivation to save more is built in, such as automatic enrollment with at least a 6 percent deferral. Adding automatic increases to gradually bump up deferrals each year is another key feature."
Focus on Outcomes
More than half of employers -- 61.5 percent -- evaluate whether the retirement plan is meeting its goals. Within that group, there was a 24 percent increase in employers who are measuring their participants' ability to meet and maintain income goals in retirement.
"Instead of simply looking at measures such as participation, account balances and deferral rates, it's great to see more plan sponsors taking a holistic view by focusing on possible participant outcomes as well," Friedman said.
Other Key Findings
PSCA's 2016 403(b) Plan Survey reports on the 2015 plan-year experience of 614 not-for-profit organizations. New this year, the executive summary includes trending data from the past five years.
For more research, analysis and insights from Principal, visit the Principal Knowledge Center and connect with us on Twitter.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of more than six million employees to solve real problems, create positive change and expand on the success of the employer-sponsored retirement system. With more than 1,000 members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans. For more information, visit www.psca.org.
Principal helps people and companies around the world build, protect and advance their financial well-being through retirement, insurance and asset management solutions that fit their lives. Our employees are passionate about helping clients of all income and portfolio sizes achieve their goals -- offering innovative ideas, investment expertise and real-life solutions to make financial progress possible. To find out more, visit us at principal.com.
PSCA is not an affiliate of any company of the Principal Financial Group.
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 mentioned or its representatives. Although 401khelpcenter.com may edit the release for editorial consistency, spelling, grammar, punctuation, or other editorial issues, it is not the author of the press release. 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.