Based on interviews with almost 500 plan sponsors in late 2012, the American Benefits Institute (the research arm of the American Benefits Council), in conjunction with World at Work, showed that while most companies kept their match (free registration required), many participants are still not taking advantage to the fullest extent possible.
According to the study, 88% of plans did not suspend or eliminate their match over the past five years, and only 8% have not restored it. But only 9% of the plans said that 90% of their employees contributed enough to get 100% of the match, with 66% of the plan executives indicating that only about half were making qualifying contributions.
One thing we learn from behavioral finance is that we should never underestimate the irrationality of participants. This speaks to the need for better plan design, like auto escalation at least up to the match, as well as education and advice from advisors.
