About 60% of employers with defined contribution plans provided participant access to financial advice last year compared to 51.8% in 2008 and 47.2% in 2005, according to the latest annual survey by the Profit Sharing/401k Council of America.
“This is a big jump in advice,” David Wray, PSCA president, said in an interview Friday. “Employers want their employees to be successful. Employees who get advice save more and have better asset allocations.”
Target-date funds have soared in popularity, with 62.3% of respondents offering this option in 2009 vs. 24.9% in 2005, according to the survey.
Automatic enrollment leveled off after experiencing significant gains in recent years; 38.4% offered auto enrollment last year, compared to 39.6% in 2008. However, in 2005, only 16.9% offered auto enrollment.
Auto enrollment is most popular with large plans, according to a news release accompanying the survey results, with 53.7% of plans with 5,000 or more participants offering this feature. The most common default investment option was a target-date fund, offered by 57% of respondents.
Profit-sharing plans “tend to offer the most generous contributions,” with average annual employer contributions of 8.1%, the news release said. The average annual company contribution in 401(k) plans was 2.1%, and the average annual contribution for employers offering a combination profit-sharing/401(k) plan was 4.7%.
A higher contribution rate for profit-sharing plans “has always been the case,” Mr. Wray said.
The PSCA survey was based on information submitted online or by mail from 931 plans with 8.6 million participants and more than $628 billion in plan assets, Mr. Wray said.
