Participation in DC plans is at an all-time high and DC plan balances have regained pre-recession levels, according to Aon Hewitt’s “2013 Hot Topics in Retirement” report. However, Aon's analysis also shows employee savings rates remain flat, suggesting that more work is needed to continue to help workers achieve retirement security.
The analysis of more than 140 DC plans representing 3.5 million eligible employees found that participation rates in DC plans have reached their highest levels since Aon began tracking this data in 2002. On average, 78% of employees participated in a DC plan in 2012, up from 75% in 2011 and 68% in 2002. The report also shows that as the markets have rebounded, average DC plan balances have reached their highest levels since 2006. The average total plan balance in 2012 was $81,240, up significantly from $57,150 in 2008.
Aon attributed the rise in participation rates largely to widespread adoption of auto-enroll features — 59% of employers now auto-enroll, up from 34% in 2007, says Aon. On average, participants subject to automatic enrollment had a participation rate of 81%, nearly 20 percentage points higher than those without it.
However, the study also shows that employees continue to save at rates insufficient to support adequate long-term savings goals. The average before-tax contribution rate remained flat from 2011, at 7.3% of pay. And most concerning, workers are not saving enough to take advantage of their company match — nearly 28% of employees contributed below the match threshold.
