Benefits September 28, 2005

401(k)'s See Average Balance Increase of 36% Over 5 Year Period

September 28, 2005 (PLANSPONSOR.com) - The average balance increase for 401(k) accounts continuously maintained from 1999 to 2004 was 36%, according to a new study.
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According to a press release on the study from the Employee Benefits Research Institute (EBRI) and the Investment Company Institute (ICI), among the group who maintained a 401(k) balance over that five year period, the average balance increased from $67,016 at the end of 1999 to $91,042 at the end of 2004. The group’s average balance increased by 15% in 2004 alone.

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The groups found a great variation in averages by age, however. According to the release, average account balances for participants in their 20’s grew 206% during the five year period, while those for participants in their 60’s were down by almost 5%.

The increase for the 20-somethings is attributed to the impact of their contributions to their accounts, while the decline in the 60-somethings account balances is attributed to the impact of the bear market on assets and the tendency for participants in their 60’s to make withdrawals.

The groups pointed out in their report that typical year-to-year reports of account balance changes do not necessarily reflect the impact of consistent participation, since the sample changes each year due to older workers leaving their plans and younger workers entering theirs. The average 401(k) balance of all participants at year-end 2004 was $56,878, compared to $51,569 at year-end 2003. The median account balance was $19,926 at year-end 2004, compared with $17,909 at the end of 2003.

Other findings of the study, according to the announcement, include:

  • Lifestyle or lifecycle funds have increased in popularity in recent years. Recently hired 401(k) participants in their 20s currently hold a higher percentage of their 401(k) accounts in balanced funds, including lifestyle and lifecycle funds, than did their peers in 1998.
  • In 2004, 19% of participants in plans that offered loans had loans outstanding. On average, among participants with loans, the loan represented 13% of the remaining account at year-end 2004. In fact, EBRI/ICI research suggests that the availability of loans serves more as an inducement to contribute more to plans rather than as a drain on participant assets.
  • The bulk of 401(k) participants’ assets remained in equities at year-end 2004, despite the wrenching experience of the bear market. On average, 67% of participants’ assets were invested in equities through equity funds, the equity portion of balanced funds, and company stock. But these averages also do not reflect the wide range of individual investment choice among all 401(k) plan participants.

The report,“401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2004” can be found here .

Benefits September 27, 2005

EEOC Sues AZ Paving Firm over Sex Harassment

September 27, 2005 (PLANSPONSOR.com) - An Arizona firm has been slapped with a federal lawsuit over charges that a supervisor harassed male workers by grabbing their genitals, simulating sex acts, and attempting to kiss them.
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The US Equal Employment Opportunity Commission (EEOC), which filed the suit in US District Court in Tucson against the Phoenix-based Sunland Asphalt, charged that another employee exposed himself while still another worker urinated on his co-workers, according to the Arizona Daily Star. The company is a paving contractor.

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The alleged harassment and retaliation began in 1999 and continued through at least 2002, said Michelle Marshall, an EEOC lawyer who filed the lawsuit. The incidents, which involved Tucson-based employees, happened mostly in Tucson but may have also occurred at a job site in Nevada, she told the Star.

The allegations are overstated, Sunland vice president Mike McWenie told the newspaper. He said the allegations stem from just one incident that occurred in 1999. “I can’t comment on any of the details or the personalities involved. All I can tell you is that we feel like we have complied with all federal and state laws on this,” McWenie told the newspaper. “This is something that happened well over two years ago. I’m at a loss. I’m baffled it has come to this.”

The EEOC has asserted that employees who filed complaints were forced to quit because the harassment was severe and supervisors were unwilling to correct improper behavior. When one employee, also seeking a promotion, complained about the harassment, a supervisor told him “you can forget about becoming foreman,” according to the lawsuit.

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