401(k) DAY 2003 CELEBRATES 401(k) PARTICIPANT SUCCESS

CHICAGO (August 29, 2003) - For households aged 50 to 61 with at least one defined contribution (DC) account, 79 percent would be adequately prepared for retirement according to analysis of the 2001 Survey of Consumer Finances. As shown in Table 1, only about 47 percent of such households without a DC account would be prepared at the same level. "This shows that participation in a defined contribution plan makes a difference," said David L. Wray, President of the Profit Sharing/401(k) Council of America (PSCA). 

Table 1
Percent of Households Aged 50-61 Able to Maintain Their Pre-Retirement Level of Living After Retirement, based on their 2001 assets and future average and pessimistic investment return assumptions.

Based on each respondent’s planned retirement age 

There is more good news. The Principal Financial Group found that the nearly 2 million plan participants working at 27,000 small-mid sized companies demonstrated positive savings and investment behavior despite the economic difficulties of the past 12 months. Overall, plan participation increased 2 percent over the prior year and the individual deferral rate increased from 6.3 percent to 6.5 percent of salary. Additionally, the employer match increased this year to an average of $.37 per dollar of employee contribution from $.35. PSCA's survey data supports these findings. For example, in its soon-to-be-released 46th Annual Survey of Profit Sharing and 401(k) Plans, the company 401(k) matching contribution as a percentage of eligible participants’ total annual payroll increased to 2.8 percent for 2002, up from 2.5 percent in 2001.

To help companies throughout the country take part in this year's 401(k) Day celebration on September 2nd, PSCA has prepared a complete set of communications materials to help educate employees about the importance of participating in their 401(k) plans and of long-term savings for retirement.

"We have added fun to our focus," said Wray. These new materials, which are available at no charge, include interactive and print 401(k) participant education tools, such as posters and payroll stuffers. Importantly, PSCA now offers interactive and print crossword puzzles, word-find and matching games that educate employees about 401(k) terms and investing. Planning tools for tailoring company 401(k) Day programs, sample program content, and profiles of programs used in the past are also available. In addition, communication materials in Spanish are available for PSCA member companies.

"We encourage companies to use 401(k) Day to promote their retirement plans and educate their workers at the same time on the importance of long-term participation in their companies’ 401(k) plans," said Wray. "Many companies have been creative in developing educational events for employees that are fun at the same time."

Wray noted that some companies have used 401(k) Day as an excuse for hosting contests, parties and other festive happenings. For example, in past years, some companies celebrated the day by encouraging employees to come to work "dressed for retirement." "Employees showed up wearing golfing attire, fishing waders or ski boots," Wray said. 

PSCA thanks its corporate 401(k) Day 2003 sponsors: Fidelity Investments, Hewitt Associates, Manulife Financial, Merrill Lynch, MFS Retirement Services, The Principal Financial Group, Putnam Investments and T. Rowe Price.

The Profit Sharing/401(k) Council of America (PSCA), a national non-profit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.