U.S. corporations have begun to see greater participation in 401(k) plans following the passage of the SECURE Act, according to the latest annual survey of profit sharing and 401(k) plans from the Plan Sponsor Council of America.
In the 64th annual survey released Thursday, the PSCA said it is beginning to see the positive impact of provisions included in the Setting Every Community Up for Retirement Enhancement Act, which was passed in late 2019.
The survey, which measured activity in calendar year 2020, showed 92.7% of employees were eligible to participate, up from 88.4% in 2019 and more than ever recorded before, which PSCA cites as a direct result of the SECURE Act provisions that allow long-term part-time employee participation. The survey says 73.6% of salaried part-time employees were eligible to participate, while 69.4% of hourly part-time employees were eligible to do so.
The survey also shows that 88.5% of participants made contributions to their plans in 2020, up from 87.3% in 2019 and another record high for the survey.
A news release announcing survey results attributed the increase in contributions to greater eligibility.
"We know, and see in the data, that when people have access to retirement savings plans at work, they use them. Expanding access to plans as the SECURE Act did is clearly creating more retirement savers," said Hattie Greenan, PSCA's director of research and communications, in the news release. "At the same time, the pandemic has created an environment that is shifting the way retirement plans are considered, designed, and provided that may ultimately reshape plans in the long run."
The survey also shows that the percentage of plans using an auto-escalation feature increased to 78.7% in 2020 from 74.7%, and that 36.5% of plans had an auto-escalation cap of over 10%. The survey cited the provision in the SECURE Act that increased the QDIA cap to 15% from 10% as the likely reason for that significant percentage.
In addition, the survey showed that the average number of investment options offered by plans was 21 funds, up from 19 funds in 2019 — the first increase in the number of options in more than a decade. The percentage of plans offering target-date funds reflected the ongoing trend of greater usage, to 82.9% from 80.4% in 2019.
PSCA surveyed 269 401(k) plans, 246 combination profit-sharing/401(k) plans and three profit-sharing plans. Among all respondents, 18.2% represented plans with $1 billion or more in assets, 22.1% represented plans with between $100 million and $1 billion, with the rest representing plans with less than $100 million in assets.
The full survey report is available on PSCA's website for purchase.