DRESHER, Pa.--(BUSINESS WIRE)--Ascensus, the nation’s largest retirement and college savings services provider, shared key trends with retirement plan advisors at its Plan On! Conference, held last week in Colorado Springs, Colo. Analyzing plans on the Ascensus platform, the data assessed key information among 401(k) plan sponsors and employees. Ascensus identified the following trends in the resulting data:
- Employer matches are becoming more customary. Fifty-five percent of employers funded a match in 2014, a jump from 52 percent who provided a match in 2013. As more plans fund a match, it signals a shift in employer dedication to enhancing benefit offerings. It also points to an improved confidence in the economy, as more companies can invest in their employees’ retirement.
- Automatic features continue to drive plan participation. By the end of 2014, 18 percent of plans utilized automatic enrollment, a three percentage point jump from 2013. Additionally, automatic enrollment has a striking impact on participation rates. Plans in which employees are automatically enrolled have participation rates that are 14 percentage points higher than those for plans without automatic enrollment. When coupled with an automatic increase option, automatic enrollment is even more impactful, with an average participation rate that is 23 percentage points higher than plans that do not offer automatic enrollment.
- Employees value a “do-it-for-me” approach. Assets invested in guided solutions (model portfolios and target-date funds combined) have spiked from a little over 17 percent in 2011 to more than 26 percent in 2014. Qualified default investment alternatives (QDIAs), including managed accounts and target-date funds, are becoming more popular and showing their worth in participant outcomes. According to Morningstar’s year-end data, 80 percent of employees who were automatically enrolled in a managed account continued to use managed accounts after two years. Further, 86 percent of employees invested in managed accounts were properly diversified based on their age and risk tolerance.
- Technology plays an important role in the participant experience. Technological advances and more widespread access to digital features have created a new user experience for employees. Currently, 85 percent of new enrollees sign up online, signaling a clear shift to digital. Employees are also taking advantage of online tools, such as the Ascensus retirement calculator, to determine their retirement readiness. Nearly 18 percent of calculator users increased their savings percentage after use, and 37 percent of employees who were not saving in their plan started contributing after using the calculator.
“We continue to see the emergence of new approaches and tools in the retirement space leading to increased participation, but the ultimate goal remains to improve retirement readiness among savers,” says Geno Cufone, senior vice president of Retirement Administration at Ascensus. “Ascensus’ objective is to help people save for the future, and the current trends are supporting that collective goal. Automatic features, expanded employer match programs, and guided approaches from plan advisors will remain a differentiator for aspiring retirees.”
Ascensus is the largest independent retirement and college savings services provider in the United States, helping over 6 million Americans save for the future. With more than 30 years of experience, the firm partners with financial institutions to offer tailored solutions that meet the needs of financial professionals, employers, and individuals. Ascensus specializes in recordkeeping, administrative, and program management services, supporting over 40,000 retirement plans and over 3 million 529 college savings accounts. It also administers more than 1.5 million IRAs and health savings accounts. For more information about Ascensus, visit www.ascensus.com.