- An ALM Intelligence report conducted by Judy Diamond Associates, found that small businesses have the best performing 401k plans, according to a statement. The second annual 401(k) Plan Benchmark Report examined 500,000 plans with an estimated $4.1 trillion in assets, covering 53 million workers in 26 industries.
- The report also found disparities between the quality of 401k plans in “blue collar” versus “white collar” industries. The certified public accountant industry had the highest quality plans, whereas the educational services industry had the lowest median plan score.
- Plan participation was no less than 86% across company size and industry, suggesting that employers are getting the value and importance of 401k plans across to their employees.
Benchmark reports like this provide employers with crucial data for comparing the quality and performance of their own 401k plans with those similarly-sized organizations in other industries. The report can also show employers whether their plans are giving employees adequate outcomes for retirement, in addition to measuring recruiting and hiring success.
With a minimum 86% participation rate across the board, employers are generally successful at getting employees signed up for 401k plans. Benefits are only as good as the number of participants they attract. The challenge now is getting workers to contribute more to their plans.
Millennials are willing to pay more for secure retirement benefits, according to some studies. Boomers, on the other hand, are saving less on average, and may have found that they don’t have the finances for a comfortable retirement.
The report found that small companies are keeping up with and, in some cases, surpassing larger companies in 401k performance. This is surprising given data complied by the U.S. Federal Reserve showing that small businesses (and their workers) don't consider retirement planning as much as their larger counterparts.
HR will have to make a getting out in front of retirement planning a priority as more boomers exit the workforce over the next decade. Workers can't afford to be too overconfident about the behavior of markets, and even younger employees are eager for financial education provided by employers.