Fidelity® Reports Average 401(K) Balance Hits All-Time High Alongside Increased Participant Engagement

One in 10 Participants Boosted Deferral Rate in the First Quarter

BOSTON--(BUSINESS WIRE)-- Fidelity Investments^®, the nation’s No. 1 provider of workplace retirement savings plans and individual retirement accounts (IRAs) ¹, today reported that the average 401(k) balance rose to $74,900 at the end of the first quarter, marking an all-time high since Fidelity began tracking account balances in 1998². This also represents a nearly 12 percent increase from a year ago and a 58 percent jump from the same time period in 2009³. In addition, nearly one in 10 participants increased his or her deferral rate during the first quarter, the largest percentage taking such action since Fidelity started tracking the figure in 2006.

Fidelity also released new insights on the positive impact employee education and engagement efforts are having on four of the most critical factors that help workers save for retirement: participation, savings level, asset allocation and making wise financial decisions during key milestones, such as when changing jobs or retiring.

“One of the best predictors of an employee’s future retirement savings is his or her engagement level in the planning process,” said Carolyn Clancy, executive vice president, Fidelity Investments. “Our innovative approach to employee education is designed to combat inertia and increase the level of engagement by communicating to participants during key life events very simple yet actionable ways to help them improve their retirement readiness.”

Engagement Programs Show Measurable Impact on Savings Behaviors

Analysis⁴ of plans that adopted many of Fidelity’s employee education programs from March 2009 through September 2010 revealed positive participant behavior changes across four important factors that contribute to retirement readiness:

• Enrollment Increases – Plans utilizing Fidelity’s engagement programs were nearly twice as likely to increase enrollment rates compared to those plans not adopting them during the same time period (54% versus 27%, respectively)⁵.
• Deferral Rates Grow – Participants in plans that leverage Fidelity’s educational communications just after enrollment were six times more likely to increase their deferral rate over participants in plans that did not utilize the programs (12% increased deferrals versus 2%, respectively).

• Asset Allocation Improves – Plans that proactively help participants with asset allocation were significantly more likely to improve age-based asset allocation across their participant population as compared to plans that didn’t provide the education (85% versus 51%, respectively)⁶.
• Cash-Outs Drop – More than half (51%) of plans that reached out to departing employees with distribution options such as staying in plan or rolling over to a qualified retirement account, such as an IRA, decreased the number of participants cashing out. The average cash-out rate for those plans decreased by two percentage points while the rate for plans not utilizing the programs increased by five percentage points⁷.

Since their launch in early 2009, Fidelity’s employee engagement programs have been adopted by 92 percent⁸ of its plan sponsors. Fidelity understands that plan sponsors have different goals for employee education, so we work with sponsors to customize programs that meet the needs of their specific participant populations.

The communications provide participants with customized messages during various life stages that often trigger financial decisions, including when starting a new job, hitting a certain milestone age, nearing retirement or separating from an employer. Fidelity’s educational communications programs go beyond our interactive web-based

tools to include an integrated mix of phone calls, emails, workshops, one-on-one consultations and direct mail, all delivered or offered more frequently at key life events to help ensure participants are armed with the customized information they need to take action.

“The results are clear,” added Clancy. “Engaging participants over the long term can dramatically increase healthy financial behaviors and the chances to achieve a more successful retirement.”

About Fidelity Investments

Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of more than $3.6 trillion, including managed assets of more than $1.6 trillion, as of March 31, 2011. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Guidance provided by Fidelity is educational in nature, is not individualized and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street,
Smithfield, RI 02917

© 2011 FMR LLC. All rights reserved.

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¹ Cerulli Associates Quantitative Update Retirement Markets 2010 and Cerulli Edge Retirement Edition, Fourth Quarter 2010.

² Fidelity has tracked average 401(k) account balances since December 31, 1998. Balances are in nominal dollars and are not inflation adjusted.

³ All data based on Fidelity’s nearly 16,500 recordkept corporate defined contribution plans and 11 million participants, unless otherwise noted, as of March 31, 2011 (excludes TEM and FIIS). The set of plans and participants used to make the calculations for the figures in this document are slightly smaller, since they represent the “Building Futures” set of plans and participants and exclude the Fidelity employee plans, phantom NQ plan participants, and some other very minor differences.

⁴ Quantity of plans studied varied depending on the factor measured, ranging from 233 to 1,131 plans. Only plans present for entire time period were included in the analysis.

⁵ Plans utilizing auto enrollment were excluded from this analysis.

⁶ Defined by a participant’s equity asset allocation being within +/- 10 percentage points of their age-based Fidelity Freedom Fund rolldown, assuming age 65 retirement. The Fidelity Freedom Funds® roll-down schedule illustrates the Freedom Funds’ target asset allocations among equities and was created by Strategic Advisers, Inc. This roll-down schedule also illustrates how these allocations may change over time. The Freedom fund future target asset allocations may differ from this approximate illustration. The Fidelity Freedom Funds® are target-date lifecycle funds designed to become more conservative and to hold a smaller percentage of equities as investors approach their retirement date. The roll-down assumes that participants will retire in the year they turn age 65. Investors should allocate assets based on individual risk tolerance, investment time horizon, and personal financial situation. A particular asset allocation may be achieved by using different allocations in different accounts or by using the same one across multiple accounts. The equity roll-down shown is not intended as a benchmark for individual investors; rather, it is a range of equity allocations that may be appropriate for many investors saving for retirement and retiring at age 65.

⁷ Weighted average rate change, March 2009 to September 2010.

⁸ Fidelity business data as of March 31, 2011.

Fidelity Investments
Corporate Communications, 617-563-5800

Source: Fidelity Investments