Nearly 70% of defined contribution balances have returned to levels prior to the stock market slump of 2008 and 2009, according to a survey by Mercer, a provider of benefits administration outsourcing.

But the data, as of Dec. 31, still shows that many participants have yet to return their account balances to 2007 levels.

The survey of the 1.2 million participants for whom Mercer administers defined contribution retirement savings plans found discrepancies between younger and older participants. Comparing year-end 2007 with year-end 2009, participants under age 30 have seen an average account balance increase of 81%, compared to a 2% average drop for participants 55 years and older.

Mercer partially attributed differences to two factors: Younger participants, with mostly smaller account balances, often saw a greater impact from making ongoing account contribution. Also, the participants age 55 and older who did realize a gain in their account typically had smaller balances.

Despite the overall improvement for its participants, Mercer said that older workers have been particularly damaged by two “lost years” in accumulating retirement savings. In fact, over the past two years 7% of participants 55 years and older lost more than 30% of their account value. Nearly 50% of those in this group took a withdrawal from their account.

“Sponsors need to engage their employees to take action,” said Dave Tolve, a retirement business leader for Mercer’s outsourcing business.

He said that employees can impact their level of savings by how they deciding when to retire, making sure they have a proper asset allocation and increasing their contribution. “The last one is the easiest to gain traction,” Tolve said.

According to the Mercer survey, participants have steadily increased their contributions every month since June, when the average contribution rate reached a low 6.83%. By the end of the year, the average participant before-tax contribution rate had reached 6.86%. Nonetheless, rates remain below 2008 (6.96%) and 2007 (7.46%) levels.

“You can’t ignore that in tough times [participants] need to prioritize appropriately and with pay cuts and bonus cuts you are naturally going to see a drop in savings,” Tolve said. “But focusing on the tax deferred contributions is still a really powerful message. A small deferral can have a big impact on your savings.”

Tolve further warned against inertia caused by automatic enrollment. It is not enough just to be enrolled at 3%. Participants should go above and beyond baseline contribution levels, he said.