DES MOINES, Iowa--(BUSINESS WIRE)--More than 600 non-profit organizations across the U.S. participated in the ninth annual Plan Sponsor Council of America (PSCA) benchmarking survey of 403(b) plans released today. Sponsored by the Principal Financial Group®, the survey results provide information plan sponsors need to help employees reach retirement goals and maximize employee satisfaction with their plan.
Non-profit organizations surveyed saw noticeable improvements in investment selections and auto-plan design features, such as increased default deferrals. The percentage of plans with a default deferral rate of more than 3 percent increased from 21.6 percent to 34 percent. In addition, organizations saw average employer contributions increase to 5 percent, up from 4.7 percent in 2015.
“Over the past several years, the PSCA survey has shown a steady increase in the use of automation and plan design enhancements. Automation is leading to greater plan enrollment, deferral rate escalation and employee contributions,” said Aaron Friedman, national practice leader, Principal®. “The addition of these features tangibly helps participants boost retirement readiness in practical and customized ways.”
Additional Auto-Features Results:
- Automatic Enrollment: The usage of automatic enrollment in 403(b) continues to slowly increase and is now used in 21 percent of plans (up from 19 percent in 2016 and 16.2 percent in 2014).
- Automatic Escalation: More than half (52 percent) of plans that use automatic enrollment automatically increase the deferral rate over time, up from 43 percent in 2015.
- Default Deferral Percentages: The percentage of plans with a default deferral rate less than 3 percent dropped in half, while the percentage with a deferral rate of more than 3 percent increased from 21.6 percent to 34 percent.
- Default Options: Organizations are shifting from a use of Money Market Funds (down to 9.8 percent of plans) to target-date funds (up to 65.8 percent of plans) as the default investment option for participants that enroll in the plan but don’t choose an option.
“Retirement readiness represents an important area of focus for financial advisors and plan sponsors to help their organization and employees,” said Friedman.
“The annual Plan Sponsor Council of America (PSCA) 403(b) survey continues to be an important source of information for plan sponsors at non-profits and educational institutions,” said Jack Towarnicky, Executive Director, PSCA. “401(k) and 403(b) retirement plans play an important role in American’s retirement readiness.”
PSCA conducted its ninth annual survey of 403(b) plan sponsors in the spring of 2017. The survey received responses from 608 non-profit organizations that currently sponsor a 403(b) plan for employees and range in size and industry from small community-based organizations to large hospital and university systems. For more information, visit https://www.psca.org/2017_403b_report.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of more than six million employees to solve real problems, create positive change, and expand on the success of the employer-sponsored retirement system. With more than 1,000 members representing employers of all sizes, we offer a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of our commitment to improving retirement security for millions of Americans.
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