PLANSPONSOR - December/January 2020 - 45

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2019 DC SURVEY: PLAN BENCHMARKING
DATA
SWEEP
2019 DC SURVEY: PLAN BENCHMARKING
Match Features
Matching contributions remain the most popular way for employers
to supplement or incent participant retirement savings. Overall, a
healthy 74% of all plans have a match, though this number does
reflect a slight drop from past years. Sponsors are expanding
adoption or use of other strategies. For example, those matching
Roth contributions or catch-up contributions have increased in each
of the past three years, to 62% and 92%, respectively. Sponsors
giving true-up matches, which, at year-end, reconcile participants'
actual vs. expected match levels, also increased, to 39%.
Plans Offering Employer Match
74%
68%
75%
80%
79%
Our latest findings on DC plans-
for benchmarking a plan against its pe
or just gleaning some new solutions
Match Structure
E
very year since 1996, PLANSPONSOR has conducted a survey of defined
(DC) plan sponsors around the country. One of the largest of its kind, the PLA
Defined Contribution Survey helps those in the industry, including spon
retirement plan advisers, catch up on new trends in plan design and conside
Employers have many choices related to how matching contributions
are structured. The two most common match formulas are
traditional and fixed-dollar structures, which match 100% of
participant contributions and are present in 40% of plans. Nearly
as popular are stretch and tiered match formulas-at 28% and
22% of plans, respectively-which require higher levels of savings
to receive the maximum match. Effective match rates are largely
unchanged from prior years, but, as this year saw, a record 51%
of plans now have a vesting schedule of two years or less.
Match Strategy
ments that are in the best interest of participants.
Why benchmark a plan? When the sponsor sets a benchmark, it essenti
baseline or standard against which to measure its plan. The sponsor can ther
plan needs to improve, set new goals and increase its performance. Sponso
mark to determine how competitive their plan is against industry peers'-a m
even more important in a competitive hiring environment.
The reality is that sponsors do not always think about their DC plan
l Traditional - E.g., 100%
of first 3%
l Stretch - E.g., 50% of
first 6%
l Fixed dollar - E.g.,
50 cents per dollar
contributed
All plan
sizes
<$5mm
$5mm -
$50mm
>$50mm -
$200mm
Plans With 'True-up' Match Provision
l Yes
l No
l Don't know
18%
39%
17%
43%
<3%
3%
>3% - 5%
>6%
23%
19%
6%
Othe
Plans Matching Nontraditional Contributions
92%
62%
100% Vesting in the Match Available
l Immediately
l In <2 years
l In 3 - 5 years (cliff)
l In 3 - 5 years (graded)
l In >6 years (cliff)
l In >6 years (graded)
1%
16%
>$200mm
l Other type of formula
Match Rate
36%
result of having a basic or minimalist plan can be employees working l
and employers, at times, carrying the burden for this. Employees who
for insufficient financial assets will tend to have greater health care an
generate more workers' compensation claims. These things, in turn,
employer's balance sheet.
Sponsors can see by benchmarking that yesterday's solutions may
The value of taking the pulse of the industry overall is to determ
10%
as industry best practices or industry concerns take hold in reality. F
a focus on increasing default deferral rates to ensure that participa
4%
36%
22%
l Tiered - E.g., 100% of
3%, plus 50% of next 2%
REPRINTED WITH PERMISSION FROM PLANSPONSOR October/November 2019
28%
22%
10%
Roth contributions
Catch-up contributions
REPRINTED WITH PERMISSION FROM PLANSPONSOR October/November 2019
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PLANSPONSOR - December/January 2020

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