A new survey of participants in defined contribution plans administered MassMutual Financial Group shows that women increased their deferral rates at twice the level of men in the first quarter of this year.
MassMutual, Springfield, Mass., published this finding in a report based on data gathered from the company’s Retirement Services Division. The unit serves approximately 1.6 million defined contribution plan participants nationwide.
For the quarter ended March 31, the survey shows that women increased their deferral rates in MassMutual-administered defined contribution plans by an average of four basis points. This compares with an average increase of two basis points among men.
One in 25 (4.22%) plan participants increased their deferral percentage during the first quarter, marking the second highest percentage in a single quarter since MassMutual began deferral rates in 2007, the survey says.
The survey notes also that, as expected, average deferral rates for the youngest savers (3.58%) are lower than older participants (7.18%); however, the savings rates for Gen Y are increasing at an accelerated rate.
Participants age 29 and under increased their savings levels by 2.29% vs. participants age 60 and over, who increased by only 0.42%. Participants aged 40 - 49 had the second highest savings level increase of 0.57% to an average deferral rate of 5.27%.
Also encouraging, the survey notes, is that only 1.30% of participants decreased their deferral percentage during the quarter. And only 2.98% stopped deferring.
The percentage of total participant assets in MassMutual’s target date and risk-based options reached an all-time high during the first quarter of 2012, accounting for 24.7% of total retirement assets under management, which is above the industry average, the survey says.
Women continue to favor age-based investments more than risk-based options—more than 2.5 times as much—at 72% vs. 28% respectively. Men remain more evenly divided on their preferences, with approximately 53% in age-based vs. 46% in risk-based investments.
Average account balances for women rose 7.93% for the quarter vs. 7.27% for men; and the gender gap is closing in terms of account balances. Average account balances for women now trail those of men by 38.8%, compared to 40.5% in late 2010.
The survey says the combined percentage of participants who initiated loans (1.26%) and hardships or other withdrawals (0.66%) was at its lowest level since 2007. The data suggests that MassMutual participants understand that borrowing against their retirement savings account can have a negative effect on their efforts to achieve long-term retirement income success.
Also of note for the quarter, there was no significant difference in loan and withdrawal rates between men and women. Historically, women have taken greater percentages of loans and withdrawals. The declining rates for women also contributed to helping close the average account balance disparity between male and female participants.