The Republican lawsuit targets reinsurance that helps insurance companies provide universal coverage without accounting for pre-existing conditions.
By Cyril Tuohy
The 56th Annual Profit Sharing and 401(k) Survey reveals that companies are contributing more to their sponsored retirement plans and adding more features, and that participants are saving at higher rates compared to the previous year.
The findings are a sign that the private sector defined contribution system, with $7.8 trillion in assets in defined contribution accounts and individual retirement account rollovers, remains popular despite grumbling from some quarters.
“Those critical of the DC (defined contribution) system in the past thought that the system would collapse during a sharp economic downturn. They were wrong,” said Bob Benish, executive director of the Plan Sponsor Council of America, which released the survey.
Defined contribution accounts, like everything else, took a hit during the financial crisis but those have now recovered and the system is stronger for it, Benish also said in a statement.
Critics of the defined contribution system have blasted what they say are the structure’s high fees and turgid disclosures. They have noted that since the system became the de facto retirement vehicle for millions of workers, plan sponsors – employers and those who serve them – have benefitted at the expense of employees and participants.
The latest survey, which measured the 2012 plan year, found that 87.6 percent of eligible employees have a balance in a defined contribution plan.
Participants are saving an average of 6.8 percent of pay, up from 6.4 percent of pay in the 2011 plan year, the survey found. The average company contribution is now 4.5 percent of pay, up from 4.2 percent in 2011, the survey also found.
A full 95.3 percent of plans made matching contributions in 2012, down slightly from 95.5 percent in 2011, the survey found.
New features being added to 401(k) plans are Roth after-tax contributions options. That choice is available at more than half of companies, the survey found. A total of 47.2 percent of plans use automatic enrollment and 35.2 percent of plans choose a default deferral percentage higher than 3 percent of pay, the survey also found.
Nearly 60 percent of plans automatically increase the default deferral percentage over time, the survey also found.
This year’s survey gathered data from 686 plans with $769 billion in assets and 10.3 million participants, PSCA said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.
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