Despite the upheavals of 2020, a third quarter analysis by Fidelity Investments indicates that employees continue striving to save via employer-sponsored plans.
Retirement Saving Trends: Holding Steady
Fidelity’s Building Financial Futures report on retirement saving trends in the third-quarter of 2020 finds that contributions to defined contribution plans are “holding steady despite these unprecedented times.”
Specific trends that plan sponsors may find encouraging include:
- Very few employees or employers have decreased savings rates. 9.4% of participants contributing to their 401(k) plan have decreased their deferrals during Q3 2020; this is up from 8.2% the year before.
- Defined plan participation continues to climb, with Auto-enrollment (AE) proving to be a changing force: 90% of employees who are auto-enrolled don’t opt-out.
- With the recent market activity, balances have rebounded by 14% from the previous quarter.
Retirement plans also helped meet the immediate needs of employees during the pandemic:
- In Q3 2020, 8% of participants took money from their plan, with the CARES Act distribution option representing 36% of those transactions.
- The average CARES Act distribution amount is $9,000, and the median amount is $2,400.
- Overall money out activity was 10% higher in Q3 2020 over Q3 2019.
Encourage Employees To Keep Saving
Plan sponsors are encouraged to keep a steady stream of communications flowing to plan participants. Make sure, for example that employees know how to revisit their contributions regularly. Offer examples of how even tiny increases add up over time. Also, consider “Auto Increase” options: Fidelity found that they accounted for 65% of deferral increases in the third-quarter of 2020.
As you communicate with plan participants, boost their confidence by reminding them that your company’s 401(k) plan is covered with an ERISA fidelity bond.
Check On Your Coverage
Don’t lose track of the basics. Be sure that your required ERISA fidelity bond is up to date—and properly covers your plan. Colonial Surety Company understands that plan sponsor are busy juggling their responsibilities. That’s why we offer a user-friendly, digital and direct service. You can easily and quickly purchase your bonds and related insurance coverage online.
Colonial’s unique, comprehensive and affordable packages arm plan sponsors with:
the ERISA bond required to protect the assets of the retirement plan from theft; Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach; and, Fiduciary Liability coverage to protect you and your assets from personal liability.
Keep in mind: only companies named on the Department of Treasury’s listing of approved sureties are able to provide ERISA fidelity bonds. Colonial Surety Company is not only U.S. Treasury listed, but also rated “A Excellent” by A.M. Best Company, and, licensed in all 50 states, the District of Columbia and most U.S. Territories.
Colonial Surety Company even includes retroactive ERISA fidelity bond coverage for past years when the plan was not covered. Colonial makes it easy, direct and instant: Obtain your ERISA Bond Package Here Now!