average 401(k) participation rates

[Guest buyertoday]

Does anyone know any good links to find the average percentage of employees who contribute to a 401(k) plan? I've seen some old surveys but want something up to date. I've noticed plansponsor (as of 11/02) estimates 75%, but I thought that might be a little high. I'd also be curious to see % w/ balances vs. % making current salary deferral elections.

Thanks.

[Guest jhilliard]

PSCA does a nice survey. We use it for our proposals and reviews; it covers almost all aspects of retirement plans. You can order it at PSCA.org; it’s a little costly but a great tool

[Guest rmeigs]

78.0% of eligible employees held balances in their 401k plans according to PSCA’s 45th Annual Survey of Profit Sharing and 401(k) Plans . This is their latest.

According to Hewitt, participation rates average at about 77 percent . Their research shows that employees nearing retirement (age 50 - 59) had the highest participation (86 percent), while those furthest from retirement (age 20 - 29) had the lowest participation (59 percent). Looked for the reference for these stats, but could not quickly find it. Contact Hewitt if you need to verify.

[MWeddell]

There are a fair number of biases in the various surveys regarding the average participation rate.

The PSCA survey tends to be biased toward those employers who are enthusiastic about their 401(k) plans. To me this is clearest when one examines the average level of contributions in the respondents' plans -- very high compared to other surveys and/or my subjective impression.

The Hewitt survey tends to include large plans to a greater percentage than is true throughout the 401(k) industry. Given that many studies have shown that large plans tend to have lower participation rates than other plans, that could bias the average participation rate.

For what is essentially a data question, I suggest that surveys based on data straight from the recordkeepers are more accurate than surveys that are compiled based on sending questionaires to plan sponsors and counting on them to submit accurate responses. Given that the big EBRI / ICI survey doesn't include this data, the next best source is Fidelity's surveys because they recordkeep plans of a wide variety of sizes. I realize that by focusing on plans of just one recordkeeper there's a different type of bias introduced, but I think this is the best one can do. Fidelity's Building Futures Volume III reports that as of the end of 2000 the average participation rate was 73%.

[Guest rmeigs]

Here is an article that reports Hewitt as saying "that participation in 401(k) plans dropped to 68.2 percent of workers at the end of 2002, from 71 percent a year earlier..."

Participation in 401(k) plans drops

http://www.bayarea.com/mld/cctimes/busines...ess/6248920.htm