Defined Contribution Retirement Plan Updates From Q2 2019

"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

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:

401k Participant Behavior

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.

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