PLANADVISER - January/February 2019 - 9

plan focus
Employer Contributions on the Rise
In 2017, companies contributed 65% as much as their workers did to DC plans
T
he decline of pension plans-often
lamented by industry commentators-is
usually told as a story
of employers decreasing their financial
interest in employees' retirements.
However, data from BrightScope,
a Strategic Insight company like
PLANADVISER, shows that employers
contribute billions of dollars a year to
defined contribution (DC) plans and
that their contributions continue to
rise each year.
Compared with the amount that
participants defer, employer contributions
are actually quite sizeable. For
instance, in 2017, employers contributed
$158 billion to DC plans, fully
65% as much as the $242 billion that
employees did.
The data also show that the amount
employers and participants deposit
into 401(k) plans has risen yearly and
that, as a percentage of participant
deferrals, employer matches have held
steady, ranging from 64% to 67% of
what their participants defer.
Looking back to 2011, six years
prior to the latest data, employers
contributed $113 billion to DC plans,
and participants, $169 billion; those
employer contributions were 67% as
much as what participants deferred to
their DC plans.
Certainly, the increase in employer,
as well as employee, contributions
may be due to the wider use of automatic
enrollment and automatic
escalation. The 2018 PLANSPONSOR
Defined Contribution Plan Benchmarking
Report notes that 41.3% of
plans have adopted auto-enrollment.
This percentage increases with plan
size. For example, only 16% of plans
with under $1 million in assets autoenroll
their employees, but 53% of
plans with $25 million to $50 million in
assets auto-enroll, as do 65.1% of plans
with more than $1 billion in assets.
Likewise, just over one-third, 33.6%,
of plan sponsors auto-escalate participants'
deferral rates, the report says.
This is true for only 11.7% of plans with
less than $1 million in assets. Autoescalation
increases to 40.4% among
plans in the $25 million to $50 million
range, and to 70.1% among plans with
assets over $1 billion. Nearly 70% of
plans overall-68.1%-auto-escalate
Employer to Participant Contributions ($b)
n Employer contributions n Participant contributions
$217
$169
$113
$119
$179
$126
$190
$134
$202
$158
$141
$139
$218
The increase in
employer, as well
as employee,
contributions may
be due to the wider
use of automatic
enrollment
and automatic
escalation.
participants' deferrals by 1% a year.
However, the initial deferral rate
that sponsors use remains low, with
the most common being 3%, used by
40.7% of plans, the report says.
Certainly, all of these developments
in plan design support the BrightScope
data showing increases in both
employer and employee contributions
to DC plans. -Lee Barney
$242
2011
2012
2013
Source: BrightScope Defined Contribution Plan Database
2014
2015
2016
2017
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PLANADVISER - January/February 2019

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