Fidelity Reports Majority of Workers Continued to Fund 401(K) Accounts During First Quarter of 2009

BOSTON--(BUSINESS WIRE)--Fidelity Investments, the nation’s No. 1 provider of workplace retirement savings plans, today made available 401(k) highlights of both employee and employer actions taken during the first quarter of 2009.

“There is no doubt that many employers and employees are feeling the impact of this challenging economy but the vast majority of workers are maintaining their commitment to saving for retirement”

Fidelity’s data¹, based on more than 17,500 corporate defined contribution plans and 11.3 million participants, showed that 97 percent of active participants² continued to make contributions in the first quarter of 2009. On average, workers³ contributed $1,700 of their pre-tax income in their workplace savings accounts in the first quarter of 2009, down slightly year-over-year ($1,860) but up over 20 percent from 2002 levels. With a majority of employers also continuing to contribute to their employees’ workplace savings accounts, total contributions (employee and employer contributions) totaled $2,780 on average in the first quarter of 2009, a slight decrease from $3,080 in the first quarter of 2008.

“There is no doubt that many employers and employees are feeling the impact of this challenging economy but the vast majority of workers are maintaining their commitment to saving for retirement,” said Scott B. David, president, Workplace Investing, Fidelity Investments. “In addition to the money that workers contributed, when you add up the employer contributions and the significant tax advantages from putting away pre-tax dollars for your retirement, the combination of these is what makes workplace savings accounts so beneficial for retirement savings.”

Employers and Workers Seeking More Guidance in the First Quarter

With the economy still uncertain and continued market volatility, Fidelity said it is seeing higher levels of worker engagement and increased demand from employers and employees across the country for holistic financial guidance. Nearly half of all plan participants contacted Fidelity about their workplace savings plans during the first three months of 2009.

Additionally, Fidelity provided nearly 4,000 financial seminars attended by nearly 208,000 workers representing over 920 employers across the country during the first quarter. While the vast majority of these seminars were held in person at employer sites, Fidelity is also seeing an increased demand for live seminars held over the Internet.

Finally, many participants are also using Fidelity’s many free retirement planning tools to help them better understand their risk tolerance and plan for retirement. In the first quarter alone, 236,000 participants used one of Fidelity’s many planning tools either on their own or with the assistance of a Fidelity representative on the phone or via a live Web chat.

Overall, nearly half of the participants who attended a seminar or experienced a planning session with a representative took some action either by rebalancing their account or increasing their contribution to their workplace savings plan.

Exchange Levels Lower; Most New Contributions Directed to Equities, Blended Options

Despite higher engagement from workers, exchange levels in the first quarter were down from the fourth quarter of 2008 and also from year-over-year levels. About 5.2 percent of participants in the first quarter made an exchange, down from 6.1 percent in the fourth quarter of 2008 and 6.2 percent during the first quarter of 2008.

Twenty-five percent of new contribution dollars are being invested in blended options, a vast majority of which are lifecycle options, with target retirement based equity, fixed-income and short-term investment allocation. More than 51 percent of new contributions to 401(k) plans are going into equities, including domestic, international and company stock.

The remaining quarter of new contributions are being invested in more conservative short-term, stable value or fixed-income investments, up slightly from the previous quarter. In total, participants are directing nearly 69 percent of their new contribution dollars into equities (domestic, international, company stock and the equity portion of blended options).

Plan Sponsors Increase Adoption of Auto-Enrollment and Roth 401(k)

Adoption of auto-enrollment by employers has been trending up. Auto-enrollment has been adopted by over 16 percent of plans, covering nearly 50 percent of the participant base. The adoption has been led by larger plans. Over 50 percent of plans with 25,000 participants or more have adopted auto-enrollment.

Employers also increased their adoption of Roth 401(k) in the first quarter of 2009. At the end of March 2009, 14.7 percent of workplace savings plans offered Roth 401(k), up from 13.2 percent at the end of 2008.

About Fidelity Investments

Fidelity Investments is one of the world’s largest providers of financial services, with custodied assets of over $2.5 trillion, including managed assets of over $1.2 trillion as of March 31, 2009. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to over 20 million individuals and institutions as well as through 5,000 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Fidelity Brokerage Services, LLC, Member NYSE, SIPC

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¹ All data is as of 3/31/09 unless otherwise noted. Analysis is based on Fidelity’s Corp DC record kept data.

² The terms "worker" and "active participant" are used interchangeably in this press release. They represent current employees of 401(k) plan sponsors who have a balance in their company's 401(k) plan.

³ Ibid.