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ASPPA: Studies Show Retirement Plan Gains, Resiliency

August 3, 2020

The American Society of Pensions Professionals and Actuaries published a story on the resiliency of defined contribution plans, which includes several key data points from the DC flash poll. Read the piece here.

 

Retirement plans made gains in 2019—and although they’ve been challenged by a pandemic and sudden economic downturn, they show surprising resiliency, two recent studies show.

Retirement plans had a good year in 2019, T. Rowe Price points out in its “Reference Point Annual Benchmarking Report,” from a variety of perspectives. And despite the many serious challenges facing them, there is even some good news for retirement plans in 2020, says investment advisory firm NEPC in its July 2020 Defined Contribution Flash Poll.

T. Rowe Price says that in 2019, average account balances rose to over $100,000, an increase of 8%. And NEPC reports that despite the hardships of 2020, more than 90% of plan sponsors say that less than 5% of Americans made early withdrawals even though the CARES Act allows it, and just over half of plan sponsors do not expect an increase in distributions this year related to the pandemic.

And there is more positive news:

  • Participation. T. Rowe Price reports that participation in plans stood at 79% in 2019, an increase of more than two percentage points from 2018 and 13 percentage point jump from 2013.
  • Auto Features. More than 61% of T. Rowe Price plans automatically enrolled their participants in 2019. And that fuels increased participation, they report; in 2019, participation in auto-enrollment plans stood at 85.3%. Further, T. Rowe Price says that in 2019, almost 80% of plans automatically increased participants’ contributions, a 10-percentage point increase in just four years.
  • Default Deferrals. T. Rowe Price says that in 2019, 37% of plans enrolled participants at a 6% default deferral rate, and that 2019 was the third year in a row at that rate.
  • Employer Matches. In 2019, T. Rowe Price says, some employers adjusted their match formulas, apparently to encourage greater saving; they report an effective match range of 4% to 5%. And the match has staying power, NEPC indicates: They report that in 2020, 77% of employers have kept the match and have no plans to reduce or suspend it.

Topics: Press, Press Coverage

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