"The Defined Contribution in Review is designed to help CEOs, CFOs, treasurers, human resources, benefits professionals and investment committees stay abreast of recent events that could have an impact on retirement plans or plan participants." This blog post is a summary of the Q2 2019 findings from Janus Henderson and includes the latest information on:
- Student loan and debt programs
- Best in class 401(k) plan benchmarks
- 401(k) participant trends
Student Loan and Debt Programs
Best in Class 401(k) Plan Benchmarks
Plan Measures
Best in Class Plans | All Other 401(k) Plans | |
Participation rate | 95% | 79.9% |
Deferral rate | 9.2% | 6.8% |
Retirement confidence | 39.1% | 19.9% |
Investment Choices
Best in Class Plans | All Other 401(k) Plans | |
Roth provision | 97.1% | 73.4% |
Index funds | 100% | 88.8% |
Managed account | 55.9% | 31.6% |
Plan Design
Best in Class Plans | All Other 401(k) Plans | |
Eligibility within 3 months | 100% | 60.8% |
Auto-enrollment | 100% | 45.8% |
Auto-escalation | 100% | 38.2% |
Default deferral rate > 3% | 82.4% | 43.7% |
Re-enrollment | 32.4% | 20.6% |
Loan payment post-separation | 55.9% | 24.3% |
Employer Contributions
Best in Class Plans | All Other 401(k) Plans | |
Effective match >3% | 76.5% | 52.8% |
Match vested within 2 years | 76.5% | 43.1% |
True-up match contributions | 76.5% | 48.2% |
Oversight Practices
Best in Class Plans | All Other 401(k) Plans | |
Investment committee | 100% | 72.9% |
Investment policy statement | 100% | 67.3% |
Fee equalization | 82.4% | 69.2% |
Financial Education Offering
Best in Class Plans | All Other 401(k) Plans | |
Saving and budgeting | 94.1% | 40.5% |
Investment basics/strategies | 88.2% | 33.1% |
Credit/debt management | 58.8% | 16.9% |
College savings | 52.9% | 14.9% |
Home buying | 29.4% | 8.7% |
No financial education | 5.9% | 45.5% |
401(k) Participant Trends
According to Vanguard's "How America Saves" 2019 report, the retirement outlook for individuals is improving due to plan design changes and participants adopting prudent investment practices.
Key findings from the 2019 report:
Source: Top DC Trends and Developments, 2Q19 Defined Contribution in Review. Janus Henderson
This blog post is not intended to be exhaustive nor should any discussions or opinions be construed as legal advice - it is intended for educational and/or informational purposes only.