U.S. companies are restoring plan contributions that were suspended or reduced since the beginning of 2008, according to 401(k) and Profit Sharing Plan Response To Current Conditions, a survey released by the Plan Sponsor Council of America late last month.
In fact, many companies are increasing and adding new contributions to their plans, according to survey responses. While companies are in the process of restoring contributions, they are increasingly focused on plan investments. According to the survey, companies are continuing the trend reported a year ago of restoring company contributions. Half of plans that suspended their matching contribution in the last four years have fully restored it.
Conducted in October, the survey represents the responses of 523 401(k) and profit-sharing plan sponsors across the country. The full survey report is available on the PSCA Web site www.psca.org. The PSCA is a national, nonprofit association of an estimated 1,200 companies that have six million employees.
Of all plans reported, 66.7 percent have maintained their matching contribution, 12.1 percent of plans increased their match or added a matching contribution, 7.3 percent have fully restored suspended or reduced matches, and 13.9 percent still have suspended or reduced matching contributions.
Companies are focused on plan investments during this volatile economic period. In the last year, 63.8 percent of plans changed their investment lineup, and 56.2 percent changed their investments in 2010.
"This is dramatic. I have not seen anything like this in 25 years of working with plan sponsors." said David Wray, PSCA president. "That so many plans sponsors are reviewing and reworking their investment lineups demonstrates the importance they see in delivering the very best investment opportunity as part of the 401(k) plan benefit for their employees, especially in these unusual times."
According to the survey, companies are also instructing employees to understand their plans and investments. More than half of plans increased employee education efforts in 2011, and 43 percent provided education specifically on market volatility.
Other key survey findings include:
Of the 14 percent of plans that suspended the match in the last four years, half have fully restored it.
Of the 11 percent of plans that suspended the non-matching contribution, 40 percent have fully restored it.
Almost 40 percent of plans reported an increase in plan participation, up from just 3.9 percent in 2009.
Eight percent of plans reported that they added an automatic enrollment feature to their plan in the last year.
Nearly one-quarter of plans monitor whether participants are on track for retirement, including more than 40 percent of large plans.