How are participants behaving with all that’s happening? Is plan design keeping up? T. Rowe Price did a deep dive into its recordkeeping data and surfaced with a few important points.
Its Reference Point report is an annual client data benchmarking report so plan sponsors can review trends and benchmark their progress and participant behavior across the firm’s client base.
Here are seven major findings:
- Plan participation was greater than 79%
- Over 61% of plans at T. Rowe Price automatically enroll participants, with 37% enrolling at a 6% default deferral
- Average account balances rose to over $100,000, an increase of 8%, although over 34% of eligible participants did not contribute to their plans in 2019
- Employers are increasing match formulas from 3% to a 4% to 5% effective match rage
- Direct rollovers of plan assets increased to 76% in 2019 from 74% in 2018
- Participant usage of loans decreased in 2019 to 22.1%, down from the seven-year high of 24.9% in 2013, but the optional loan provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act could change that trend
- Allocations to company stock investments increased more than 11%.
Coronavirus impact
“The report analyzes past data to help our clients plan for the future and to guide participants toward better retirement outcomes,” Kevin Collins, head of Retirement Plan Services said in a statement. “This year is different, of course; as we dissected the data from 2019, we could not ignore these changes we have experienced so far in 2020. The coronavirus pandemic affected the way we live, the way we work, and even the way we interact with our clients and the retirement plan participants we serve.
“We recognize the financial strain of the coronavirus pandemic could have repercussions long after 2020,” he added. “We know that life evolves and priorities change, and we continue to see—now more than ever—the importance and significant impact plan design and financial wellness programs have on keeping participants on track with their financial priorities.”