PSCA's annual survey shows that 2019 was a banner year for retirement plans – and a valuable lifeline for many during the COVID-19 pandemic.
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This story originally appeared on ValueWalk
Arlington, VA (December 17, 2020) – The PSCA's 63rd annual survey, released today, reflecting plan year 2019 data, showed record postings and participation rates for the third year in a row.
More employees had and contributed to their plans than ever before, and employers paid participants an average of 5.3 percent of gross annual wages, the highest ever.
The plan participants contributed an average of 7.6 percent to wages in 2019, together with the 5.3 percent that companies bring in, this results in an average savings rate of 12.9 percent in 2019.
"2020 was a challenging year in many ways, and companies faced unprecedented challenges," said Hattie Greenan, director of research at PSCA. "While preparedness plans have suffered, the fact that they have been in such good shape this year bodes well for a quick recovery once the economic impact of the pandemic wears off."
Other important results of this year's report are:
Participation – More than 90% of Eligible Employees have an account balance, and most (87.3%) of the contributions made in 2019. Roth – Roth contributions are now allowed in three-quarters of the plans, up from 69.1% in 2018. Target Dates – Eighty percent of plans had a target fund in their menu, up from 68.6 percent in 2018. Managed Accounts Forty percent of plans now offer participants a professionally managed investment alternative, up from 36.3 percent in 2018. Mobile Tech – Nearly 60 percent of plans now offer access to plans via mobile technology, up from 47.5 percent in 2018.
Amid all of these positive movements, some important aspects of the planning design remained stable. In-plan annuity availability is still less than 10 percent of plans, as it has been in recent years. While ESG / SRI investing has been a hot topic lately, less than three percent of plan sponsor respondents included this option in their plan investing menu.
"We closed 2019 with the passage of the SECURE Act, which contains a number of provisions designed to improve and enhance the security of retirement, including lifelong income options," said Nevin Adams, chief content officer and director of retirement research, American Retirement Association.
While the economic and physical impact of COVID-19 can put a strain on retirement preparation, our year-end 2019 results suggest that the retirement prospects for Americans with access to a retirement plan at work were the best that were has ever existed.
"As we emerge from the economic meltdown of the pandemic, we are optimistic about this solid foundation – and hope that more employers can and will support these important programs," said Adams.
About the survey
PSCA's 63rd Annual Survey on 401 (k) and With-Profit Plans reports the 2019 plan year experience with 602 plans. The full report can be purchased at https://www.psca.org/research/401k/63rdAR. Media copies can be requested from firstname.lastname@example.org.
Via the Sponsor Council of America plan
The Plan Sponsor Council of America (PSCA), part of the American Retirement Association (ARA), is a diverse, collaborative community of pension sponsors who work together on behalf of millions of employees to solve real problems, create and create positive change expand on the success of America's voluntary, employer-sponsored retirement system. With members representing employers of all sizes, PSCA offers a forum for extensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource for policymakers, the media, and other stakeholders as part of its commitment to improving retirement benefits for millions of Americans. More information is available at psca.org.