Employee contribution rates in 401(k) and combination profit sharing/401(k) plans continued to rise in 2015, said an executive summary of the Plan Sponsor Council of America’s latest annual survey.
The average contribution rate for employees rose to 6.8% of gross annual pay in 2015, up from 6.5% in 2014. The average company contribution, meanwhile, rose to 3.8% for 401(k) plans, but declined to 5.4% for combination plans. In 2014, companies contributed on average 3.2% to 401(k) plans and 5.5% to combination plans.
The survey also found that 57.5% of the plans surveyed use automatic enrollment, up from 52.4% in 2014. More than half (51.6%) reported having a default deferral rate of more than 3% in 2015, up from 40.4% in 2014, and 68.3% reported using auto escalation, up from 65.3% the previous year.
On asset allocation, the survey found that target-date funds accounted for 19.8% of plan assets in 2015, up from 15.8% in 2014. However, the percentage of plans offering target-date funds declined to 63.2%, down from 69.9% in 2014.
Profit sharing, 401(k) and combination plans continue to offer 19 investment options on average, and assets continue to be most commonly invested in active domestic equity funds (21.4%), followed by target-date funds (19.8%), domestic equity index funds (12.4%), stable value (8.1%) and balanced funds (6.5%).
Other findings include:
- 75% of plans have a qualified default investment option, and 75% use a target-date fund as the QDIA;
- 81.9% of eligible employees contributed to their plans in 2015, up from 80.5% in 2014;
- Loan usage rose in 2015. The average aggregate percentage of participants who had loans increased to 25% in 2015, up from 14.6% in 2014. DC assets loaned as a percentage of total plan assets rose to 1.6%, and the average loan per borrower rose to $9,390, up from $6,216 in 2014.
- Roth 401(k) contributions were permitted by 59.9% of surveyed plans in 2015, down from 62% in 2014. Twenty percent of employees made Roth contributions when offered in 2015.
The 59th annual PSCA survey features responses by executives from 614 plans — 321 401(k) plans, three profit-sharing plans and 290 combination plans. Among respondents, 38.3% represented plans with $100 million or more in assets.