Women and young investors are saving more and retirement plan participants overall are borrowing less, MassMutual’s Retirement Services Division announced Tuesday. In an analysis of its defined-contribution participants, the company found female defined contribution participants increased their deferral rates at twice the level men did in the first quarter of 2012.
Average account balances rose for women too, increasing 7.93%, while average account balances for men increased 7.27%. The gap between women’s average account balance and men's narrowed from 40.5% in late 2010 to 38.8%.
Women aren’t the only group to increase their savings. While Gen Y participants still have lower deferral rates than their older coworkers, they are increasing their savings at an accelerated rate. Participants under age 29 increased their savings level by 2.29%, compared with the 0.42% increase seen among participants over 60. The 40-49 age group also increased their savings by 0.57%. Furthermore, just 1.3% of participants overall decreased their savings during the first quarter and just 2.98% stopped making deferrals.
In other encouraging news, participants who took a loan or hardship withdrawal fell to the lowest level since 2007, MassMutual said. Less than 1% of participants took a hardship withdrawal and just 1.26% of participants initiated a loan.
"Participants on our platform are taking positive actions towards their retirement savings goals,” Elaine Sarsynski, executive vice president of MassMutual's Retirement Services Division and chairman and CEO of MassMutual International LLC, said in a statement. “Deferral percentages are up, with the greatest increase coming from Gen Y, and participants are letting their money work for them by avoiding loans, withdrawals and other behaviors that can have a negative impact."
Overall, participants in MassMutual plans favored target-date and risk-based options. The percentage of total assets in those funds reached an all-time high, according to the company, at 24.7% of total retirement assets. Women are especially likely to utilize age-based products, with 72% choosing age-based investments, compared with 28% who chose risk-based investments. Men were more evenly divided; 53% chose age-based products, and 46% chose risk-based investments.