Insights from 2010 PLANSPONSOR DC Survey
In a very real sense, this has been a “rebuilding” year for many plan sponsors and participants: a time spent rebuilding account balances, rebuilding and/or restoring employer match contributions, a time for shoring up participant rates, and—in some cases—restoring trust. The markets, overall, were sympathetic to those causes but, in many respects, the still-soft economic trends doubtless weighed on the kinds
of dramatic trend shifts that we have seen in prior years. Meanwhile, plan sponsors remained unsure about
several key plan design elements: fees, target-date glide paths, retirement-income offerings, the focus of
their investment policy statements, and the “best” option for a qualified default investment alternative
(QDIA), to name just a few.
Just a year after a number of high-profile employers chose to suspend and/or eliminate their 401(k) matches,
there was evidence of a modest restoration. Matching contributions were offered by more than three-quarters of the plans responding to this year’s survey but, while that was slightly higher than the 73.6%
in 2009, it was not enough to offset the 12.3% who, in last year’s survey, indicated that they had recently
eliminated the match/employer contribution. That said, while the overall trends were largely unchanged,
more than half the “mega” plan respondents (see “Sizing Up the Respondents”) indicated a match equivalent to between 51% and 99% of 6% of salary, compared with 37.9% that identified that match level a year
ago, with most of that difference coming from the “50% on 6% of salary” matching category. More than a
quarter of responding plans vested participants in that match immediately ( 43.4% of mega plans), though
more than one in five ( 23.6%) made participants wait five years, consistent with trends in the 2009 survey.
Only a quarter ( 24.9%) of plan sponsor respondents said that “all or nearly all” of their participants were
deferring enough to take full advantage of the employer match, a reading that declines sharply with plan
size. Participation rates were roughly flat with a year ago, with responding plans reporting a combined
participation rate of 71.5%, compared with 72.3% a year ago. The median participation rate was also
lower: 75.0% in 2010, compared with 78% in last year’s survey.