Employer 401(k) contributions hit a six-decade record

A recent study also shows that auto enrollment reached a new high

Employer contributions to 401(k) plans have hit a new record, according to a recently released survey from the Plan Sponsor Council of America (PSCA). The survey, which collected data from 2017, found that employers were contributing an average of 5.1% of pay to their employees’ 401(k) accounts, the highest percentage ever recorded in the 61-year history of the PSCA survey. Employees chipped in an average of 7.1% of their pay, according to the survey.

The survey — the 61st Annual Survey of Profit Sharing and 401(k) Plans — noted that the most-used benchmarks for retirement plan success remained participation and deferral rates (cited by 90.8% and 75.8% of plans, respectively, in the latest survey). Only 31.4% of plans said they use participant income replacement ratios as a success measure, and 57.5% reported using average account balances as a plan success benchmark.

Auto enrollment hits a high

The use of automatic enrollment to boost participation hit new highs, with 61.2% of plans offering the feature (although less than one-third of plans with fewer than 50 participants reported doing so). The most common default deferral rate was 3%, which was used by 32% of plans, followed by 6%, which was used by 23.8%.

Nearly three-fourths (73.1%) of plans had retained an independent investment advisor to assist with fiduciary responsibilities— up from 69.5% in 2016.

The survey also found that plan sponsors continue to add design features to increase participation and savings rates, such as the availability of Roth contributions, which has doubled in the past decade and was available at 70% of all plans in 2017.

According to the survey, plan sponsors monitor a number of participant behaviors. Nearly 71% monitored participant contribution levels, 51.8% monitored loan usage, 48% monitored investment allocations and 44.5% monitored hardship withdrawals.

Among other items, the survey also showed:

  • One out of five employers were actively encouraging participants to keep assets in the plan at retirement.
  • Nearly a third of plans provided a suggested savings rate for participants – and for more than 4 in 10, the rate was higher than 10%.
  • 71% of plans offered target-date funds, with an average of 22.1% of plan assets invested in them. Nearly 40% of plans offered a professionally managed account alternative to participants.
  • The use of mobile technology to provide plan services to participants has doubled since 2014; mobile technology was used by 43.6% of companies in 2017.
  • Fewer than 10% of plans offered an in-plan annuity option to participants.

PSCA’s survey reflects the 2017 plan-year experience of 605 defined contribution (DC) plan sponsors. PSCA is part of the American Retirement Association.


PlanSponsor, “Minority of 401(k) plan sponsors measure retirement readiness as benchmark of plan success,” Rebecca Moore, Dec. 13, 2018

Pensions & Investments, “PSCA: 401(k) participation up, as well as contributions,” Margarida Correia, Dec. 11, 2018

ASPPA Net, “A record savings rate for 401(k)s,” ASPPA Net staff, Dec. 11, 2018

Important information

Blog header image: Jakub Krechowicz/shutterstock.com

Jon Vogler
Senior Analyst
Retirement Research, Invesco Consulting

Senior Analyst Jon Vogler draws on extensive pension expertise to offer retirement thought leadership for Invesco. In addition to writing Invesco’s Retirement blog, he tracks legislative and regulatory developments and contributes as a writer and editor to a variety of retirement-related Invesco communications.

Prior to joining Invesco in 2008, Jon spent more than 25 years in the research, writing, compliance and underwriting areas of the retirement services industry, including roles as a senior consultant at Mutual Benefit Life’s pension consulting firm and as a compliance manager in the Automatic Data Processing retirement services division.

Jon earned the Fellow, Life Management Institute (FLMI) and Competent Toastmaster (CTM) designations. He has a B.A. in History from Rutgers, The State University of New Jersey.

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