Employers must make greater efforts to boost participation rates in defined contribution plans among the nation’s 61.5 million workers who are younger than age 35, a new report concludes.
Nothern Trust, Chicago, published this finding in a new survey, The Path Forward: Engaging the Younger Employee in DC Plan Participation. The report is the second installment of Northern Trust’s research series on the future of defined contribution plans.
Northern Trust engaged Greenwich Associates to interview 45 DC plan sponsors at some of the largest companies in the United States, plus 11 DC investment consultants. Altogether, the DC plans included in the analysis represent more than 1.5 million participants and more than $175 billion in assets.
According to the study, plan sponsors reported strong participation rates of 71% or higher among the majority of employees, but younger employees lagged their older counterparts.
Among employers reporting a participation of 71-80%, just 12% of employees were below age 35. This compares with a participation rate of 23% among employees age 35 or older.