NINETY-NINE PERCENT OF 401(k) PARTICIPANTS STAY THE COURSE

Stability of 401(k) Asset Allocations Prevents Further Market Decline

Chicago (September 21, 2001) – The overwhelming majority of 401(k) participants have maintained their asset allocation this week, contrary to current representations of 401(k) investment activity. "401(k) participants have continued to think long-term," says David L. Wray, President of the Profit Sharing/401(k) Council of America. "American companies have committed significant resources to educate employees about 401(k) investing. Thanks to this effort employees understand the benefits of staying the course."

According to Hewitt Index data, only a tiny fraction (0.58 percent) of 401(k) assets were reallocated on Monday September 17. In addition, this percentage would have been substantially smaller had not the markets been closed the week before. "We believe the slight transaction spike on Monday was the effect of accumulated transactions from the previous week" says William McNabb, Senior Vice President of The Vanguard Group of Investment Companies.

Fidelity Investments, the nation’s largest provider of 401(k)’s also reported that transactions have not been out of the ordinary. "401(k) participants are a rock in the midst of the current market uncertainty," says Wray. "Were it not for the stability of the 401(k) system, the market decline would be much greater."

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.