Matches, Automatic Features Becoming More Common

Twenty-six percent of 401(k) assets are now in model portfolios and TDFs.

Fifty-five percent of plan sponsors funded a match in 2014, up from 52% in the previous year, according to Ascensus’ analysis of the retirement plans it serves.

In addition, 18% of plans automatically enrolled participants in 2014, up from 15% in 2013. Assets in model portfolios and target-date funds (TDFs) have surged from 17% of all plan assets in 2011 to 26% in 2014. 

Citing data from Morningstar, Ascensus said that 80% of employees who were automatically enrolled into a managed account remained invested in the fund two years later, and 86% of employees invested in managed accounts were properly diversified according to their age and risk tolerance.

Eighty-five percent of new enrollees sign up for their retirement plan online, signaling a clear shift to digital, Ascensus said. Retirement calculators can also be very helpful for participants; nearly 18% of those who used a calculator increased their savings rate after using it, and 37% of employees who were not participating in their retirement plan joined it after using the calculator. (See “Your Clients Auto-Enroll, Now What?”)

“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 Gene 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 advisers will remain a differentiator for aspiring retirees.”