The survey focused on various compensation scenarios to determine how much value employees place on a 401(k) employer match when making decisions about new job opportunities. Employees were more likely to accept a position that had an employer match as part of its overall compensation package. Only 13% say they would take a job with no company match, even if it came with a higher pay level.
“Employer contributions play a vital role in helping Americans reach their retirement savings goals, with these contributions representing more than 35% of the total contributions on average to an employee’s workplace savings account,” says Doug Fisher, senior vice president of Workplace Investing at Fidelity, based in Boston.
He adds that Fidelity recommends a total retirement saving rate between 10% and 15% of salary to ensure employees will have enough for retirement. However, the survey notes that many working Americans will only reach that savings level if their 401(k) contributions are complemented with an employer match.
According to the survey, a 401(k) plan is the sole retirement savings vehicle for an increasing percentage of U.S. workers, with 42% saying they are not saving in any capacity outside of their 401(k) account. Yet personal and retirement savings are expected to fund a significant portion of workers’ retirement income. Fidelity recommends that individuals save enough to replace 85% of their net final pay, and more than half of that income is expected to come from individual retirement savings. As a result, employer contributions have become increasingly important, and a key factor in helping individuals meet their retirement savings goals.
Fidelity 401(k) data finds that 79% of workplace savings plans currently offer some type of employer contribution—such as a 401(k) match or profit sharing—which covers 96% of Fidelity’s 13 million plan participants. As of June 30, the average employer contribution was 4.3%, with employers contributing an average of $3,540 per employee annually. This is more than $1,000 higher than the average employer contribution 10 years ago.
More information about Fidelity is available at http://www.fidelity.com.