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REtirement plans

More Employers Adding 401(k) Plan Features to Drive Participation and Savings, Says New Schwab Data

SAN FRANCISCO, Aug 24, 2010 (BUSINESS WIRE) -- Charles Schwab, a 401(k) provider to approximately 1.5 million company retirement plan participants, today released new insights into the growing number of employers providing their employees with value-added 401(k) plan features that help drive positive plan participation and savings behaviors.

According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010:

  • Nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42 percent in 2005.
  • More than three-quarters (76%) of employers currently include target date funds in their fund line-ups, compared to 57 percent in 2005.
  • Thirty-eight percent of employers automatically enroll participants, up dramatically from just five percent in 2005. An even greater number of larger companies automatically enroll participants. Among companies with more than 2,500 participants, 53 percent use automatic enrollment.
  • Thirty-seven percent of employers using automatic enrollment are also using automatic savings increases, up from 14 percent in 2006, when Schwab's plan clients first began implementing automatic savings increases.
  • Sixty-nine percent of employers provide a 401(k) matching contribution, down from a peak of 76 percent in 2006.

    Feature Adoption Rates (2005 through June 30, 2010)

 



"For many 401(k) investors, the 401(k) is their primary retirement savings vehicle, so it is important that employers continue to make available plan features that drive better participation, savings levels and outcomes," said Dean Kohmann, Charles Schwab vice president of 401(k) plan services. "The employers we work with understand this responsibility as evidenced by some significant increases in features like automatic enrollment, automatic savings increases, and professional guidance in the form of target date funds and one-to-one advice."

Schwab Retirement Plan Services, Inc. provides recordkeeping and related services with respect to retirement plans and is a subsidiary of The Charles Schwab Corporation.