PSCA survey shows continued growth in DC plans

The results of the 56th Annual Profit Sharing and 401(k) Survey from the Plan Sponsor Council of America (PSCA) show continued growth in defined contribution (DC) plans. During the last couple of years, participation rates, deferral rates, and company contributions have increased steadily, and are now equal to or higher than they were before the recession, the survey reveals.

“Those critical of the DC system in the past thought that the system would collapse during a sharp economic downturn,” stated Bob Benish, PSCA’s Executive Director. “They were wrong. Was the system impacted the same way everything else in the economy was? Sure, but it is recovering and becoming stronger as both companies and participants are refocusing on saving and looking at more holistic approaches to financial wellness.”

Key findings

Among the key findings in the survey:

• 87.6% of eligible employees have a balance in the plan.

• Participants are saving an average of 6.8% of pay (up from 6.4% in 2011, and 6.2% in 2010).

• 95.3% of plans made matching contributions in 2012, when provided for in the plan (up from 89% in 2010 and 85.2% in 2009).

• The average company contribution is now 4.5% of pay, up from 4.2% in 2011 and 3.7% in 2010.

• Roth after-tax contributions are now available at more than half of companies.

• Automatic enrollment is used by nearly half of plans (47.2%), including 61.5% of large plans.

• More plans are using a default deferral percentage higher than 3% of pay (35.2%), and nearly 60% of plans automatically increase the default deferral percentages over time.

Source: PSCA press release, October 17, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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