2022
DC Plan Benchmarking Survey

Respondent Profile

Plan Sizes

It has long been put forward that differences in plan size correlate to differences in plan design, with larger plans—i.e., those with $200 million or more in plan assets—using their size and scale to adopt higher levels of plan oversight and lower investment fees. Such plans are also frequently the first to use more progressive design features. For example, larger plans were among the first to adopt automatic enrollment and remain more likely to offer the feature today, although smaller plans are catching up. Large plans are also more likely to follow some accepted fiduciary best practices, such as having an investment committee.

Plan Types

The 401(k) plan is the most common employer-sponsored retirement plan. However, looking at 403(b) and 457 plan types, which are connected to specific employee populations and subject to different regulatory requirements, reveals those types are more likely to be structured for retirees. They are much more likely to offer systematic withdrawals at retirement and immediate eligibility to participate in the plan upon hire. 403(b) plans are more likely to offer retirement income products, perhaps due to legacy plans that traditionally offered such options to teachers. All plan types, however, show the same level of in-person advice and guidance opportunities for participants.

Contributions

Employer contributions that do not require participant deferrals are offered by about half of DC plans. Unlike matching contributions, which are only given to participants actively deferring into the DC plan, nonelective and profit-sharing contributions are allocated to all employees. The most popular contribution structure is a “pro-rata” profit sharing plan in which each participant receives an allocation equal to a uniform percentage of his or her compensation. One-quarter of plans are using safe harbor contributions, which allow them to provide employees with a minimum saving amount and not have to go through annual discrimination testing.

Employer Match

Employer matches have long been seen as a way to encourage participants to save in their DC plan, and three-quarters of DC plans offer matching contributions to their participants. Eligibility to receive matching contributions has decreased in past years: 80% of plans now make participants eligible for the match as soon as they are eligible to contribute to the plan. More than one-third of plans also offer immediate vesting of the match. However, another one-third have vesting of five years or more, and 60% of all plans offer a graded vesting schedule instead of a cliff, meaning matched contributions vest in increasing amounts over some sort of time period, with an allowed maximum of six years.

Industry Types

Especially in the recent labor market, benefits programs are an important part of the competition for talent. Employers need to offer retirement programs that attract and retain the right people, which means finding a relevant group of peers/competitors within an industry context is a critical part of any benchmarking exercise. For example, employees of retail organizations or construction firms likely have needs and expectations that differ from those in financial services or law firms. That gives rise to differences in design areas, such as the use of re-enrollment, profit-sharing contributions and in-plan Roth conversions.