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August 21, 2009 |
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401(k) Participants Remain Diligent, Vanguard Says |
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Participants in 401(k) plans have shown little signs of
panic, despite deep market losses and the uncertain economy, according to
Vanguard.
The fund company has found that plan participants continue
to invest for retirement through the workplace programs and have engaged in
only modest trading activity through the turbulent market.
They have also experienced “overall losses far milder than
the precipitous declines of the U.S. and international stock markets,”
according to Vanguard.
The report was based on the 2008 plan-based behavior of more
than 3 million 401(k) participants in more than 2,200 defined contribution
plans administered by Vanguard.
Among the findings:
- More
participants are accessing a balanced, diversified automatic investment
solution, such as target-date funds. The report cited the Pension Protection
Act of 2006, and the creation of default investment baskets, as helping steer
investors into balanced investments.
- Automatic
enrollment is leading to more workers being covered by retirement plans. Vanguard
noted that automatic enrollment plans administered by Vanguard have a
participation rate of 84%, compared to a participation rate of 60% for
voluntary 401(k) plans.
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