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More Retirement Plan Metrics 2017: Keeping Facts in Perspective

The Plan Sponsor Council of America (PSCA) recently released its 60th Annual Survey of Profit Sharing & 401(k) Plans reflecting 2016 plan experiences. Together with the PLANSPONSOR DC Survey that PEI summarized in its Winter 2017 DC Insights, the PSCA Annual Survey represents a key tool to help plan sponsors and consultants evaluate the state of America’s defined contribution retirement system and provide standards to compare the progress of individual plans. As noted last quarter, there are no major surprises apparent from this data. However, the PSCA survey also confirms that best practices are being implemented across a growing number of plans and the number of employees contributing continues to expand. At the same time the PSCA Survey noted that because the number of stand-alone profit sharing plans funded only by company contributions has declined for six straight years, it will no longer break out data separately on these types of plans.

Comparing Facts
Both the PLANSPONSOR Survey and the PSCA Survey have an established process and many years of publishing data—for PLANSPONSOR over 20 years and PSCA has just reached its’ 60th year. However, there are some differences in the sample size and focus of the surveys that are helpful to be aware of to keep both sources of information in perspective.

  • PSCA Survey: The PSCA survey sample is 590 401(k) and profit sharing plans. Over 37% of the sample represents plans with over 1,000 participants and more than $100 million is assets. While a wide variety of industries and business segments are represented, the survey is more heavily weighted towards larger plans.
  • PLANSPONSOR Survey: PLANSPONSOR gathered more than 4,000 responses from DC plans of all types and sizes from $1 million to over $2 billion in plan assets with over 87% represented by 401(k) plans. In this survey over a third of the sample included plans with assets under $5 million in assets, while only 21% had assets greater than $200 million. While a wide variety of DC plan types and employer segments are represented among a larger sample size the survey is more heavily weighted towards smaller plans.

Keeping the focus of each data set in mind it can nevertheless still be useful to look at a side-by-side comparison of some of the key plan metrics from both surveys. The differences in the data can be explained by the differences in the composition of the samples.

Category PSCA PLANSPONSOR
Participation % 88.7% 77%
Average Deferral % 6.8% 6.6%
Average Balances $ $102,290 $50,603
% Offering Roth 63.1% 68%
% Offering One Loan 55.1% 60%
% Offering TDF 73.1% 75%
% Offering Auto Enrollment 60% 50%

Despite the inherent differences between these two surveys they show a strong consistency across most of the categories. The key topic of divergence is the average account balance where the consistency of the PSCA sample and its higher concentration of large plans and corresponding higher salaries may explain this gap.

Take Away for Plan Sponsors
Many plan sponsors have a desire to measure their plan against a benchmark to provide an indication of how the plan is performing. It is important to remember that each organization’s demographics, culture, overall benefits package and staffing plan is unique, and the retirement plan reflects all these characteristics. Each of these surveys contains a wealth of data that can be used to provide a preliminary benchmark for an individual plan across a broad range of data points. A quick comparison with either survey results can help provide insights for features of a plan to be considered further or may raise awareness for possible plan design changes.