HRMorning.com » Surprise! Retirement contributions going up

Surprise! Retirement contributions going up

August 18, 2009 by Jim Giuliano
Posted in: In this week's e-newsletter, Latest News & Views, Money, Pay and benefits

Are your employees starting to pump more into their retirement accounts? A national retirement-account administrator reports a new upward trend in contributions.

Fidelity Investments analyzed the 401(k) accounts it oversees — all 11.2 million of them — and reported in the most recent quarter that about 5% of participants increased their contributions, while 3% lowered theirs.

That’s good news for 401(k) managers, since in the previous three quarters, Fidelity reported that more people decreased their contributions than increased them.

More good news: Fidelity noted that its average 401(k) balance rose 13.5% in the second quarter, to $53,900.

On the down side:

  • Fidelity’s research shows the  portion of companies that have cut or eliminated contributions rose to 9%  in the second quarter, from 7%  in the first quarter.
  • While T. Rowe Price Group reported that the number of employers that have cut or ended matches has held steady at 7 percent since the spring, Vanguard Group said the portion of companies that have cut contributions to plans doubled to 10% in the second quarter from 5%  in the first quarter.
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