Participation rates and deferral rates among participants in 403(b) plans rose last year vs. 2011, reflecting both an improved economy and greater participant confidence, according to the latest annual survey by the Plan Sponsor Council of America.
The participation rate rose to 66.2% from 64.3%, and the average deferral rate rose to 5.7% of salary from 5.4%, said a news release on the survey results issued Wednesday.
“People appreciate and are utilizing retirement savings vehicles,” Robert Benish, executive director and interim president of PSCA, said in an interview.
“Some of it (higher participation and deferral rates) is driven by the economy, but people believe in the system,” Aaron Friedman, national non-profit practice leader for Principal Financial Group, said in an interview. Principal Financial sponsored the PSCA survey.
The higher deferral rate also is due to “employees in general having a better feeling about the economy, and they are more willing to save,” Mr. Friedman said.
Mr. Friedman added that increased education and communication efforts by sponsors played a role in encouraging employees to save more. For example, he said the survey reported that 70.7% of plans used e-mail communications last year vs. 65% in 2011, while 24.8% of plans used webinars last year vs. 19.9% in the previous year. Also, 54.2% of plans reported using one-on-one meetings for participants with providers last year vs. 50.6% in 2011.
The Internet-based survey was conducted in March with 573 plan executives.
