Research

Art by Dadu Shin

2014 DC Survey: Plan Benchmarking

Published in PLANSPONSOR January 2015

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Micro=<$5MM;    Small=$5MM –$50MM;    Mid=>$50MM –$200MM;    Large=>$200MM –$1B;    Mega=>$1B

DC Plan Features
OverallMicroSmallMidLargeMega
Employer match71.8%59.6%76.2%75.1%79.2%85.1%
Safe harbor46.9%55.7%46.1%38.7%42.7%39.5%
Roth feature54.6%49.4%56.6%54.3%54.7%65.8%
Auto-enrollment40.0%19.2%42.3%55.4%61.9%65.2%
Auto-escalation25.5%7.9%25.6%35.9%43.2%52.1%
Systematic retirement withdrawals55.7%45.9%57.9%57.8%64.9%64.7%
DC Plan Oversight Provisions
OverallMicroSmallMidLargeMega
Plan adviser61.7%52.0%61.5%74.9%71.2%68.2%
Participant managed accounts35.6%36.9%32.7%32.5%39.3%48.8%
Investment policy statement64.7%43.6%67.7%81.5%83.5%86.2%
Loan provision79.2%71.0%80.3%84.7%86.5%90.2%
Hardship withdrawal provision88.3%84.9%88.7%92.5%89.7%91.7%
Fee equalization policy12.9%9.1%12.4%17.7%17.6%18.5%
When Employees Are Eligible to Participate in the Plan
OverallMicroSmallMidLargeMega
Immediately upon hire36.7%18.2%30.0%55.5%73.5%77.1%
Within 3 months26.3%23.4%31.9%25.4%19.9%16.9%
After 4 to 6 months9.0%11.3%10.5%7.4%1.4%2.3%
After more than 6 months28.0%47.1%27.6%11.7%5.2%3.8%
Employer Match Level
OverallMicroSmallMidLargeMega
>100% of first 6% of salary7.7%6.3%7.9%5.4%11.0%11.1%
100% of first 6% of salary9.6%7.4%7.9%9.7%13.8%20.1%
51%–99% of first 6% of salary19.8%21.3%15.2%20.4%27.1%29.9%
50% of first 6% of salary27.1%22.3%29.4%33.3%25.2%19.4%
<50% of first 6% of salary28.8%34.9%32.5%25.4%18.6%9.0%
Other7.0%7.8%7.1%5.7%4.3%10.4%
Employer Match/Contribution Frequency
OverallMicroSmallMidLargeMega
Each pay period73.9%71.3%71.7%73.7%84.0%81.9%
Monthly5.3%7.2%4.7%5.7%2.8%3.8%
Quarterly3.1%2.5%3.0%4.3%1.9%4.6%
Annually15.9%17.3%18.3%15.2%9.4%8.0%
Other1.9%1.8%2.2%1.1%1.9%1.7%
Retirement Income Options Offered
OverallMicroSmallMidLargeMega
In-plan retirement income products that guarantee monthly income (e.g., deferred fixed annuities, GMIBs*)9.1%6.6%9.4%10.2%13.1%11.0%
In-plan products that guarantee a base benefit that can increase (e.g., deferred variable annuities, GMWBs~)4.0%3.4%3.9%3.8%6.6%3.5%
In-plan products not offering guarantees (e.g., managed payout funds, managed account distributions)8.2%6.7%7.2%7.5%13.9%14.1%
Out-of-plan annuity purchase/bidding service (e.g., Hueler Income Solutions)4.7%2.5%3.8%4.4%8.3%16.1%
Unsure what type of income products are offered33.1%47.9%33.9%22.1%14.1%7.8%
No income-oriented products/services offered47.2%37.4%47.4%57.8%56.6%57.3%
Note: *Guaranteed minimum income benefits. ~Guaranteed minimum withdrawal benefits
Investment Vehicles Used
OverallMicroSmallMidLargeMega
Mutual funds92.3%89.9%93.2%96.8%95.8%83.9%
Separate accounts22.0%22.4%20.3%15.1%21.2%46.3%
Collective investment trusts14.9%8.7%8.8%14.5%29.9%58.4%
ETFs* (outside of brokerage windows)7.1%10.4%6.6%3.6%4.0%7.1%
Self-directed brokerage windows18.3%7.3%14.6%26.4%36.2%47.5%
Mutual fund windows4.5%4.7%3.6%4.7%4.2%8.6%
Other5.1%4.8%4.2%3.6%10.7%7.1%
Note: *Exchange-traded funds
Investment Classes/Options Available
OverallMicroSmallMidLargeMega
Target-date funds69.8%56.9%71.3%76.5%81.7%86.3%
Target-risk funds39.5%50.2%41.3%30.9%29.6%12.5%
Balanced funds73.1%72.5%77.4%72.1%68.4%59.0%
Money-market funds63.5%65.5%64.1%62.9%62.2%53.9%
Employer stock7.7%1.4%3.2%8.3%21.2%43.4%
Stable value funds59.7%38.6%64.0%73.2%77.3%73.4%
Real estate/REITs*27.8%22.9%28.6%32.7%33.8%26.2%
Alternative investments4.8%4.8%4.9%5.3%4.2%4.3%
Socially responsible funds11.3%9.1%10.3%13.6%17.0%13.7%
Note: *Real estate investment trusts
Expense Ratio to All the Investment Options
OverallMicroSmallMidLargeMega
<0.25% (<25 bps*)9.2%6.3%7.2%10.3%13.2%28.3%
0.25%–0.50% (25–50 bps)16.7%10.7%12.7%21.0%32.3%39.5%
>0.50–0.75% (51–75 bps)15.7%7.4%14.6%28.5%29.5%15.5%
>0.75%–1.0% (76–100bps)15.2%9.5%24.0%14.9%6.7%1.6%
>1.0%–1.5% (101–150 bps)7.1%10.0%8.9%1.8%1.0%1.9%
>1.5%–2.0% (151–200 bps)0.9%1.9%0.7%0.2%0.0%0.0%
>2.0%–2.5% (201–250 bps)0.1%0.3%0.1%0.0%0.2%0.0%
>2.5% (>250 bps)0.1%0.1%0.1%0.2%0.0%0.0%
Do not know34.8%53.7%31.5%22.5%17.1%13.2%
Note: *Basis points
Investment Advice Offered to Defined Contribution Plan Participants
OverallMicroSmallMidLargeMega
Financial adviser outside plan34.5%41.6%39.7%26.1%17.1%9.1%
Third party*19.3%14.4%18.1%19.6%25.8%41.7%
Proprietary from DC provider29.6%19.0%32.5%37.3%40.5%32.2%
Through another source4.2%4.2%4.9%3.6%3.4%2.3%
Total offering advice70.4%68.1%74.5%66.8%68.9%64.4%
No investment advice offered29.6%31.9%25.5%33.2%31.1%35.6%
Note: *Independent of recordkeeper (e.g., Financial Engines, Morningstar)
Results Averages
OverallMicroSmallMidLargeMega
Participation rate77.2%74.2%78.1%77.5%80.0%80.8%
Deferral rate6.4%6.1%6.2%6.6%7.1%7.7%
Account balance$84,166 $71,483 $85,515 $85,334 $93,226 $115,093
Participants with loans14.0%10.8%13.8%15.6%16.7%20.5%
Hardship withdrawals*1.4%0.9%1.3%1.7%1.9%2.6%
Investment options held5.15.45.35.04.64.0
Note: *Percentage of participants taking hardship withdrawals in past year
Agree or Disagree: "Most of our employees will achieve their retirement goals by age 65."
OverallMicroSmallMidLargeMega
Agree8.8%9.4%7.6%9.6%9.2%11.6%
Slightly agree20.4%18.8%19.3%22.3%21.2%25.2%
Undecided22.2%25.0%21.8%18.1%24.0%22.6%
Slightly disagree28.2%26.3%28.8%29.7%29.2%27.7%
Disagree20.3%20.5%22.5%20.3%16.4%12.9%

Methodology

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The data that follow represent the analysis of 5,291 responses to the 2014 PLANSPONSOR Defined Contribution (DC) Survey, collected between late June and mid-September 2014. The survey results have been published in two parts: The defined contribution provider ratings were published in the November 2014 issue of PLANSPONSOR, and the plan benchmarking results appear here.

Archive

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