All Time High: Employer Contributions



Lots of data points to how important retirement plans are to employees and businesses. Employer sponsor retirement plans are even more beneficial when the company provides a match–and a growing number of employers are recognizing this.  Based on a new analysis, Fidelity reports that employer contributions have achieved a record high–and–401k account balances are on the rise too.


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At Benefits Pro, Kristen Beckman shares that an analysis of over 44.5 million retirement accounts by Fidelity found: “Employer contributions…reached a record-high 4.8% during the quarter. More than 8 in 10 workers received an employer 401(k) contribution in the first quarter, and 78% of workers contributed to their 401(k) at a level that allowed them to earn the full matching contribution offering….” Concluding that “Americans appear to be refocusing on investing for their future after a few years of saving less and investing more conservatively in response to the pandemic and the subsequent economic challenges,” the Fidelity analysis also revealed:


Retirement savings account balances are up for the second quarter in a row….The average 401(k) balance increased to $108,200, up 4% from the fourth quarter of 2022 and 5% from 5 years ago. The average 403(b) account balance increased to $97,900, up 6% from the previous quarter….Total 401(k) savings rates increased to 14%, up from 13.7% in Q4 2022 and near Fidelity’s suggested savings rate of 15%, including employee and employer contributions.


Boomers still working are saving at the highest rate – 16.7% – and Gen Z has bumped its average savings rate to 10.5%, up from 10.2% last quarter. Furthermore, this generation’s average 401(k) account balance increased by 17% over last quarter….Gen Z account balances are up 34% from the first quarter last year, which makes them the generation with the most account growth year over year.


Reassuringly, the analysis by Fidelity uncovered some “good” downward trends too. For example, “the percentage of participants with a loan outstanding dropped to an all-time low of 16.6% for the first quarter, down from 21% 5 years ago.” As Kevin Barry president of Workplace Investing and Fidelity Investments sums up:


“We are encouraged to see positive gains for retirement savers, evidenced through rising account balances, improved savings rates, and a commitment by employers – including small business – to help employees prepare for the future….Americans have experienced some tumultuous years, but through Congress’ investment in retirement savings through the SECURE Act of 2019, as well as individuals’ continued commitment to save, we are optimistic for the future of retirement security.”


Plan sponsors across the country are doing the important work of encouraging all employees to understand more about their finances and save for retirement. The wisest plan sponsors are also taking a few minutes to look out for themselves–by ensuring they are protected in the event of ERISA violations and fiduciary breach claims. With litigation and regulatory actions on the rise, no plan sponsor wants to personally pay for an ERISA defense attorney at the cost of $600—per hour.  At Colonial, a whole year of fiduciary liability insurance is less than a few dollars a day, and we even include Cyber Liability coverage to protect the business and retirement plan in the event of a cyber breach. When it comes to ERISA, it’s best to be proactive: choose your affordable plan sponsor protection package here in minutes.


Armed with Colonial’s liability coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000. Uniquely, Colonial even includes Cyber Liability Insurance (for the plan and the business), locks in multi-year rates and offers installation payments. Conveniently, our Fiduciary With Cyber liability package is now available with a one year commitment. Protect yourself and your business, for a few dollars a day, now:


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Good To Know

Business News Daily reminds us that retirement plans turn out to be important for employees and companies alike: “There are many major benefits in offering retirement benefits to your employees, from increasing productivity to attracting new talent. An employee retirement plan can be the backbone of your benefits package and an essential ingredient of a positive company culture that increases employees’ general well-being.” Toward these goals, as Plan Sponsor reports, many employers are carefully reviewing benefit offerings and implementing plan design changes: “With an eye toward boosting equitable access to benefits, they have adjusted employee compensation, added mental health benefits, used targeted communications and maintained affordable employee medical care for workers.”


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Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country. Serving customers since 1930, we are the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.