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January 28, 2015 at 09:22 AM
While it may be that too few Americans are saving enough, nearly one-third of 401(k) participants increased their contribution deferrals last year, a higher rate than ever seen before, according to a Cogent Reports study.
Just as encouraging: the 26 percent of participants who did not do likewise but said they intend to in the next year.
Last year’s rate of deferral increase far surpassed expectations, as only 21 percent of participants indicated their intention to increase deferrals in 2013.
Gen X and Y participants are pacing the trend.
“The reason this increase is coming primarily from the younger generation may be because these cohorts are starting to understand the value of investing in their defined contribution plans,” explained Linda York, VP of syndicated research at Market Strategies, the Boston-based research consultancy that publishes Cogent Reports.
Increasing contributions from younger participants bodes well for plan providers that stay the course in an era where many are getting out of the record-keeping business, said York.
Providers that maintain a presence in the record-keeping side of the business “may be sitting on a potential gold mine with their Gen X and Gen Y participants,” she said.
Beyond plan design and participant savings trends, the report gauges participant satisfaction with their plan providers.
