Survey data released yesterday from the Profit Sharing/401(k) Council of America (PSCA) reveals 401(k) plans held at a steady pace in 2002, as employee deferral rates fell slightly while employer contributions ticked upward.
While some 80.3% of employees held 401(k) balances even last year, deferral rates dipped .2% (5.4% to 5.2%) for non-highly compensated employees and .1% (6.4% to 6.3%) for higher-paid workers. To balance the scales, employer contributions accounted for 4.1% of payroll, a modest .1% increase over 2002.
The deferrals dip comes as participants have more fund options than ever available. Nearly 81% of plans offered 10 or more funds in 2002, up from almost 70% in 2001. Perhaps more choice really does equal less participation, as Columbia University Assistant Professor Sheena Iyengar found after analyzing some 793,000 workers in 647 retirement plans. When offered more choices, Iyengar discovered, "we seem to prefer to have no choice at all."
To advance employees plan participation and investing acumen, 55.2% of plan sponsors offer one-on-one investment counseling, 50.2% present advice online, and 31.9% provide investment advice hotlines, PSCA finds. For detailed survey results, visit PSCAs Web site.