From the August 2011 issue of Research Magazine • Subscribe!

Vanguard Study Breaks Down Savings, Fund Investments by Industry

The finance industry beat the nation as a whole when it came to retirement savings and employees of larger finance and insurance companies had higher average retirement-account balances than both their counterparts at smaller finance and insurance companies and Vanguard plans as a whole, a Vanguard report released on July 7 shows.

This year, for the first time, Vanguard also released industry-focused reports that analyze the behavior of plan participants in specific industries, including finance and insurance. The findings are part of Vanguard’s “How America Saves 2011,” the latest annual report to investigate retirement-planning trends that is based on 2010 data of more than 2 million plan participants.

Average participation in defined-contribution plans at finance and insurance companies was higher than the Vanguard average participation rate of 74 percent. Plan participation was 83 percent for larger finance and insurance firms (with more than 1,000 employees) and 82 percent for smaller finance and insurance companies (fewer than 1,000 employees).

At $96,658, the average retirement-account balance of staff in smaller finance and insurance companies was higher than those of participants in overall plans ($79,077) and larger finance and insurance company plans ($77,587).

The study also found that, in 2010, 64 percent of larger finance and insurance companies had an auto-enrollment plan versus 19 percent of the smaller companies and 24 percent of all Vanguard plans. The average deferral rate was 6.8 percent for smaller finance and insurance firm plans and Vanguard plans in aggregate last year. It was 6.6 percent for larger finance and insurance firms.

National Results

Across eight industries, the plans of small utility firms (with a 92 percent participation rate) and large mining companies (with an 88 percent participation rate) had the best enrollment rates in the report.

On average, participants in the plans of both small and large utilities saved at a higher rate than their counterparts in the other industry plans. Their 9.0 percent and 8.2 percent average contribution rates, respectively, surpassed the 6.8 percent average for Vanguard plans in aggregate. The plans of large manufacturing companies lagged with a 6.5 percent average contribution rate.

 Auto enrollment plans were far more prevalent at large manufacturing companies: 67 percent of large manufacturing companies had such a plan versus 24 percent for all Vanguard plans.

Large plans tended to offer target-date funds more prevalently than smaller plans: Ninety-three percent of large ambulatory health-care firms offered TDFs, far surpassing the 79 percent of all Vanguard plans offering the funds. The standout in terms of small-industry plans was utilities, 94 percent of which offered TDFs.

At $237,081, the average account balance of participants in plans of large mining companies was significantly higher than the average account balance of participants in Vanguard plans collectively ($79,077). In contrast, the lowest average account balance was the $63,697 for participants in large information services company plans.

The “How America Saves 2011” industry benchmark reports are based on Vanguard’s 2010 record-keeping data for nearly 2.2 million participants in 1,552 qualified defined-contribution plans offered by companies in the ambulatory health care; finance and insurance; information services; legal services; manufacturing; mining, oil and gas extraction; technology; and utility industries.

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