The average contribution rates in 403(b) plans among both employers and participants are increasing, according to a survey from the Plan Sponsor Council of America and Principal Financial Group.
In the 11th benchmarking survey of 403(b) plans, the PSCA said the average contributions of plan sponsors rose to 5.5% of pay in 2018, up from 4.7% in 2017, while the average contributions of participants rose to 6.6% of pay in 2018, up from 6.3% the previous year.
Among all plans surveyed, 81.7% allow both employer and participant contributions, while 17.6% only permit participant contributions. The more participants in a plan, the more likely the plan will only allow participant contributions. For plans with 1 to 49 participants, 16.2% only permit participant contributions, while 23.8% of plans with 1,000 or more participants only allow participant contributions.
Overall participation in 403(b) plans has increased steadily over the decade PSCA has conducted the survey, with 81% of eligible employees participating in 403(b) plans in 2018, up from 79.2% in 2017 and up from 75.8% in 2008.
The percentage of surveyed plans making automatic enrollment available over time decreased in 2018 to 21.8% from 23.9% in 2017, the first time a decrease was recorded since 2012, when 14.6% of surveyed plans made it available, compared to 14.9% in 2011.
Non-profit organization executives sponsoring 558 plans responded to the survey in the spring. Total asset sizes were not provided.
The report is available for purchase on PSCA's website.
