PLANADVISER - September/October 2017 - 14

plan focus
Employer Generosity Grows
Data show overall upward trend in company match contributions
EMPLOYER dollars as a percentage of
employee defined contribution (DC)
retirement
plan
savings
increased
from 2009 through 2014, then slightly
dipped in 2015, according to data from
BrightScope-like PLANADVISER, a
Strategic Insight company. In 2009,
employer-contributed matches totaled
64% of employees' savings for that
year, and this percentage reached 77%
in 2014. However, it ticked back to 73%
in 2015. In other words, despite the
minor retreat, employers are supplying
a larger percentage of dollar contributions
to the DC marketplace than ever
before. Over time, this will likely be
a powerful multiplier for participant
outcomes and industry flows.
% of Participants' Annual Savings Contributed by Employer
77%
64%
68% 66% 65% 66%
73%
matic deferral
The employer match and autooften
the
rates
are
most powerful guide to a participant's
savings rate. But, the rise in automatic
enrollment, automatic escalation and
better compensation packages could
all
explain why
company matches
have increased. As seen in the accompanying
chart, both participants' and
employers' contributions have grown,
year over year. Also, it is anticipated
that plan sponsor utilization of automatic
features and higher deferral
rates will continue to influence overall
savings growth-particularly that of
new employees benefitting from these
plan design features.
Overall, qualified defined contri2009
2010
2011
2012
Employer
vs. Participant Contributions
n Participant contributions n Employer contributions
$250b
2013
2014
2015
bution retirement plan assets have
continued to soar, to over $5 trillion,
representing more than 700,000 plans
and 85 million participants. With net
assets continually increasing, the
market has reached escape velocity.
Demography is working in favor of
retirement cash flows, and BrightScope
expects that they are on pace for
continued growth. These trends look
promising for the health of the retirement
planning market, and the livelihood
of plan advisers.
While net flows in defined contri$200b
bution
plans have been drifting lower,
2015 data BrightScope obtained from
the Department of Labor (DOL) reveal
some encouraging developments.
In spite of total participant outflows
$150b
$100b
$50b
increasing in 2014, the defined contribution
market has grown to such an
extent that it is unaffected by a slightly
negative outflow. Based on the same
BrightScope Labor Department data,
cash contributions to DC plans have
grown steadily-on average, 5% annually-from
2009 through 2015.
After the Great Recession, most near$0b
2009
2010
2011
Source:
BrightScope, a Strategic Insight company
2012
2013
2014
2015
retirees deferred their retirement decision.
That promised a pent-up demand
for retirement plan assets later in the
decade, and the industry is seeing the
release of that demand now. -PA
14 | planadviser.com september-october 2017
http://www.planadviser.com
PLANADVISER - September/October 2017

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