Retirement Plans: How Are We Doing?



Are the funds carefully being invested into retirement accounts every pay period producing a return? Statistics on the average balances in 401(k) plans at the end of 2021 indicate: yes! Balances are up. Additionally, younger workers continue to take retirement saving seriously and their progress is impressive.


Good News

Reporting on research from the Employee Benefit Research Institute (EBRI), a nonpartisan group, the National Association of Retirement Plan Advisors (NAPA) shares these highlights from 2021s year end:


  • Rebounding from an omicron-depressed November, the average 401(k) average 401(k) balance of older (age 55-64) workers with more than 20 years of tenure soared 3% in December, while that of younger (25-34), less tenured (1-4 years) workers surged 3.8%…


  • For the final quarter of 2021, the younger cohorts average 401(k) balance was up 10%, while the average balance of the older, more tenured group rose 7.7%. 


  • However, for the full year, the average 401(k) balance of the older group rose 20.5%, and the younger cohorts balance gained a whopping 33.3%! That outpaced 2020, when despite considerable volatility, the average 401(k) balance of the younger, less tenured cohort ended the year 29.2% higher than it began the year, while that of older, higher tenured workers closed the year 16.5% higher.


  • Remember that the older cohorts larger balances are, generally speaking, more influenced by market moves than by contributions, while the latter has a greater impact on the smaller balances of the younger group. 


With many workers across the country maximizing the possibilities of employer sponsored 401(k) plans and trying harder then ever to save, plan sponsors are advised by experts to periodically review the participation rates, deferral rates and personalized rates of return. Understanding these measures can inform plan design and communication strategies to further help participants—and the plan as a whole—achieve end goals. Increasing auto-enrollment deferral rates and adjusting the employer match are two examples of how plan design adjustments might advance plan goals—and employee saving practices.


As a plan sponsor, you have the continuous fiduciary responsibility of ensuring participants are benefiting from the plan. As such, it is critical to revisit your risk management plans periodically—and make sure that all appropriate coverage is in place and current. Let Colonial Surety Company help. Just select an affordable, package and receive a three point coverage solution:


  1. The ERISA bond required to protect the assets of the retirement plan from theft.
  2. Fiduciary Liability coverage to protect you and your assets from personal liability.
  3. Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.

Obtain Your Complete ERISA Bond Package Today!


Good To Know—and Do

Research shows that 70% of workers between the ages of 18 and 23 are saving for retirement. Though their account balances are modest, pension experts observe that this is a promising trend, given that Gen Z has plenty of time to continue saving.


Of course it is critical to ensure that the salary deferrals employees entrust to the retirement plan are deposited on time. Ensuring that deposits are made accurately and on time is a critical duty of care for plan sponsors. As the National Association of Plan Advisors (NAPA) remind us: “Depositing salary deferrals on a timely basis is a requirement for plan sponsors. This task must be accomplished expeditiously. The DOL is laser-focused on plan sponsors that make late deposits of salary deferrals, including incorporating a specific question about any late deposits on the Form 5500.”


Remember too that even allegations of a fiduciary breach put your personal assets at risk. Why take chances?  At Colonial Surety, you can affordably obtain fiduciary liability insurance and get peace of mind that your personal assets are protected from a breach of responsibility in the administration or handling of the employee retirement plan. With an annual premium that is less than what you would pay for just one hour with an expert ERISA lawyer if disaster strikes, Colonial can help you quickly obtain fiduciary liability insurance now: Fiduciary Liability for Plan Sponsors Here.


Mistakes do happen—and plan sponsors who become aware of ERISA violations can proactively seek to course correct  via EBSA’s Voluntary Fiduciary Correction Program (VFCP) and/or Delinquent Filer Voluntary Compliance Program (DFVCP). The 401(k) Plan Fix-It Guide  from the IRS also provides support for identifying and correcting past mistakes.Colonial’s here to help too with multi-year packages that provide plan sponsors across the country with  convenience, value—and protection. Lock in your coverage and rates now. We even offer multi-year rates and installation payments. Complete Plan Sponsor Package Here.


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. With a Trustscore of 4.8, we help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.