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Consistent Retirement Plan Participation Results in Higher Account Balances

A recent study conducted jointly by the Employee Benefit Research Institute and the Investment Company Institute titled, “What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Account Balances, 2010-2014” found that the average account balance for employees who contributed to their defined contribution plan consistently was 1.7x higher than for the average account balance in general. For plan sponsors, there are two key takeaways. First, it is important to recognize the power of consistent participation in your retirement program. Second, is that using plan statistics, such as participant average or median account balances, has limitations (since many participants may have retirement assets with their previous employers). Rather than utilizing such plan statistics to infer courses of action as a plan sponsor, we have found it proves more fruitful to focus on improving overall plan design, while working with your recordkeeper to construct strong educational campaigns to help keep employees on track to reaching retirement readiness.