The percentage of 403(b) plans reporting increased participation climbed to 44.5% in 2011, according to a new survey of 403(b) plan activity conducted by the Plan Sponsor Council of America.
The increase was 37.9% in the 2010 survey. The percentage of plans reporting a decrease in participation rates was 10.8% in 2011 vs. 14.5% in 2010.
“I think more people are confident in their jobs, and there are fewer layoffs,” said Aaron Friedman, national non-profit practice leader for Principal Financial Group, when asked why participation had improved. Principal Financial sponsored the survey.
The higher percentage of plans reporting an increase in participation also could be attributed to increased auto enrollment among these plans, Mr. Friedman added. The survey said 10% of plans added auto enrollment in 2011 vs. 8% adding this feature in 2010.
The survey also showed that 15.9% of plans experienced increases in overall participant deferral rates, while 10.2% experienced an overall decline.
The latest survey illustrated that changes in plan design among 403(b) plans — such as increases auto enrollment, adjustments in investment lineups and greater education — signify that these plans “are moving in the same direction as 401(k) plans,” PSCA President David Wray said in an interview.
“They are not at the same point as 401(k) plans, but they are following the 401(k) trends,” said Mr. Wray, whose organization conducts an annual survey of 401(k) and profit-sharing plans.
The survey found that 32.6% of all plans, and 64.5% of plans with more than 1,000 participants, made investment lineup changes in 2011. It said 51.6% of all plans, including 78.4% of plans with more than 1,000 participants, reported increasing education efforts.
The annual 403(b) plan survey, conducted in October, was based on responses from executives at 579 plans.