Contributions to retirement plans fell last year after record participant and employer contribution rates in 2021, according to a survey of 401(k) plans released Thursday by the Plan Sponsor Council of America.
Despite sliding contribution rates, however, the study showed that participation remains strong, even if down from record high levels seen in recent years.
The PSCA’s 66th Annual Survey of 401(k) and Profit Sharing Plans showed that nearly 90% of eligible employees had 401(k) accounts and 85.6% made contributions in 2022.
The combined employer and employee share was 12.1%, down from 15.3% in 2021. And while the average employer contribution slipped below 5% of salary, an impressive 96.2% of companies still made planned matching contributions, the survey said.
“Last year we stated that the strength of the system in 2022, with record levels of contributions and adoption of participant support designs, would help protect retirement savings against any economic downturn,” said Hattie Greenan, director of research and communications at PSCA. in a statement. “Currently that seems to be the case.”
The study showed that Roth after-tax contributions are now available in 90% of plans. In addition, the availability of auto-enrollment increased in 2022 and it is now used in 64% of plans, continuing the growth seen over the past decade.
In terms of investments, the study shows that 83% of plans use an independent investment adviser to help with fiduciary responsibility, up from 76.8% in 2021. There was also a slight increase in the availability of retirement income products and ESG funds, the report said. .
“Despite economic challenges, plan sponsors have moved forward in implementing design features to support participants — features that have become best practices over the past several years continue to emerge,” Will Hansen, PSCA’s executive director, said in the statement. “We’ve also seen an increased focus on investments as employers consider the best options for their participants for long-term financial success.”