Savings Rates in Retirement Plans Have Increased

Loans are on the decline, PSCA says.

Participants are saving more in their retirement plans than they were two years ago, according to the Plan Sponsor Council of America’s (PSCA) 58th Annual Survey. Lower-paid employees are contributing an average of 5.8% of their salaries, up from 5.3% in 2013; this is higher than it was prior to the steep market crash in 2008.

While there was an increased use of plan loans in 2008, the percentage of participants with loans and the percentage of loan assets have been decreasing and have reached their lowest rates in more than a decade, PSCA said. Slightly less than 15% (14.6%) of participants have an outstanding loan, and only 0.7% of all plan assets are held in loans.

The survey also found that 99% of all full-time employees are eligible to participate in their plan, and half of plans allow part-time employees to participate. Eighty percent of workers participate in their plans, and 88% of eligible participants have an account balance. Sixty-two percent of plans allow Roth contributions.

One-quarter of plans suggest a targeted deferral rate to participants. Of those that do, half suggest a rate higher than 6%. Just more than half (52.4%) of all plans use automatic enrollment, and this jumps to 70% among large plans with 5,000 or more participants. Twenty percent of all plans use mobile technology to communicate with participants; among large plans, this increases to 30%.

“The increase in savings rates by participants and the steady plan participation rates demonstrate that participants value their company’s retirement plan,” says Hattie Greenan, director of research and communications for PSCA. “The fact that loan usage has decreased while savings rates increased indicate that education about how plans and markets work is working.”

Information about how to purchase the full survey is available here.