New Charles Schwab Data Reveals Increase in 401(k) Plan Participation

Data Also Shows a Majority of Employers Continue to Match Contributions

Tuesday, October 27, 2009 6:01 am PDT



Public Company Information:


SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab today released new data showing the number of workers participating in 401(k) plans increased even as the stock market declined and the economy weakened. In addition, most 401(k) plan participants continued to receive matching contributions from their employer.

According to data taken from retirement plans serviced by Schwab, overall 401(k) plan participation increased four percentage points through the end of 2008, in the middle of the financial crisis, to 77 percent from 73 percent at the end of 2007.

The participation rate jumped even higher, to 84 percent from 77 percent, among plans that offer automatic enrollment programs. However, whether or not automatic enrollment was offered, participation rates generally increased across the board, particularly among small and mid-size companies.

“The good news is that most employees are sticking with their 401(k) plan, which continues to be one of the best vehicles to save for retirement,” said Catherine Golladay, vice president of 401(k) participant education and advice at Charles Schwab. “The even better news is that people are also contributing to their accounts at almost the same level as they were prior to the market downturn. In fact, the average contribution rate in our plans stayed around seven percent from 2007 to 2008 which is a reflection of people getting more serious about saving.”


Number of Plans


Participation Rate


Participation Rate

Plans with Automatic Enrollment   158   77%   84%
Plans without Automatic Enrollment   377   71%   74%
Total   535   73%   77%

*Schwab client participation rates were measured from 12/31/2007 through 12/31/2008 among 535 plans serviced by Schwab. The same 535 plans were measured in 2007 and 2008.

Most Employers Still Offering Matching Contributions

Despite enormous pressure on many companies to cut costs, relatively few eliminated their 401(k) match among Schwab 401(k) plan clients. As of July 31, 2009, less than one in ten employers (9%) stopped making matching contributions according to Schwab data.1 Sponsors in some of the industries most impacted by economic conditions, including manufacturing and retail, were more likely to suspend their match. Comparatively, no companies in the healthcare or wholesale industries suspended their match, according to the Schwab plan data. Overall, nearly seven in 10 (69%) employers are currently offering a 401(k) match.

“Our plan sponsor clients tell us that the employer match is one of the most important 401(k) plan features for employees and eliminating it is a last resort even in difficult economic times,” said Robyn Alcorta, vice president of 401(k) client services for Charles Schwab. “Matching employee 401(k) contributions is important in keeping the 401(k) benefit competitive and driving high participation and savings rates, and employers tell us that these factors lead to a more productive and loyal workforce.”

Most 401(k) Participants Continue to Avoid Hardship and 401(k) Loans

While the economic crisis of 2008 was serious, most participants in Schwab-serviced 401(k) plans resisted temptation to tap retirement savings. The number of people taking loans from their 401(k) plan actually decreased in 2008 to 5.67 percent from 5.91 percent in 2007. The number of people taking hardship loans increased, but only slightly, to 0.91 percent in 2008 compared to 0.8 percent in 2007.2

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 667,000 banking accounts, and $1.36 trillion in client assets. 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. Named Highest in Investor Satisfaction by J.D. Power and Associates, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, 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. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at (1009-11488)

1 Match data measured from 12/31/2007 through 7/31/2009 among 664 plans serviced by Schwab.

2 Loan and hardship data measured from 12/31/2007 through 12/31/2008 among 664 plans serviced by Schwab.


Charles Schwab
Michael Cianfrocca, 415-667-0344
Intermarket Communications
Emily Ahearn, 212-909-4781

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