Employers Adding 401(k) Plan Features to Drive Participation and Savings, Says New Schwab Data

Thursday, September 8, 2011 5:30 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"The 401(k) plan is now the primary source of retirement savings for an overwhelming majority of Americans"

SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab, a 401(k) provider to approximately 1.5 million company retirement plan participants, today released new insights into the growing number of employers providing their employees with value-added 401(k) plan features that help drive positive plan participation and savings behaviors. Key statistics include:

  • 81 percent of employers now make 401(k) advice available to plan participants, compared to just 42 percent in 2005.
  • 70 percent of employers currently include target date funds in their fund line-ups, compared to 57 percent in 2005.
  • 41 percent of employers automatically enroll participants, up dramatically from just five percent in 2005. These figures are even greater among larger companies. At companies with more than 2,500 participants, 57 percent use automatic enrollment.
  • 36 percent of employers using automatic enrollment are also using automatic savings increases, up from 14 percent in 2006, when Schwab’s plan clients first began implementing automatic savings increases.
  • More than two-thirds (68 percent) of employers provide a 401(k) matching contribution, down from a peak of 76 percent in 2006.

Feature Adoption Rates (2005 through June 30, 2011)

Feature   2005*   2006*   2007   2008   2009   2010   6/30/2011
Participant Advice   42%   56%   58%   62%   70%   80%   81%
Target Date Funds   57%   62%   62%   65%   68%   70%   70%
Automatic Enrollment   5%   14%   24%   33%   35%   39%   41%
Automatic Enrollment and Automatic Savings Increase   N/A   14%   24%   30%   35%   36%   36%
Employer Match   73%   76%   75%   72%   67%   68%  

68%**

“The 401(k) plan is now the primary source of retirement savings for an overwhelming majority of Americans,” noted Catherine Golladay, vice president of 401(k) participant services at Charles Schwab. “We see more and more employers taking this responsibility seriously and looking for ways to provide additional support for 401(k) participants. We are also gratified to see that employers are focusing more on those tools that clearly drive results, like advice, automatic enrollment and automatic savings increases.”

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.2 million client brokerage accounts, 1.44 million corporate retirement plan participants, 754,000 banking accounts, and $1.65 trillion in client assets as of June 30, 2011. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. Independent investment advisors are not owned, affiliated with or supervised by Schwab. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com. (0911-5729)

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*Results for 2005 and 2006 do not include adoption rates of plans administered under the 401(k) Company platform.

** Estimated.

Contact:

Charles Schwab
Susan Forman, 415-667-0494
susan.forman@schwab.com
or
Intermarket Communications
Eric Hazard, 212-754-5610
ehazard@intermarket.com

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