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PSCA Releases 2022 403(b) Survey

Amid economic uncertainty, nonprofits enhancing 403(b) retirement plans for employees

New survey finds nonprofits have increased contributions more than 20% while keeping financial literacy top of mind

As employers everywhere continue to recover from the long-term impacts of the COVID-19 pandemic and compete for talent, employer contribution rates to 403(b) plans rose almost 24% year-over-year from 4.6% in 2020 to 5.7% of gross annual pay in 2021, according to an annual 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA), part of the American Retirement Association.

The survey, sponsored by Principal Financial Group®, gathered information from more than 300 nonprofit organizations about their 403(b) plan experience in 2021. It found more eligible employees utilized retirement plans in 2021 (83.4%) than in 2020 (82.6%). An average of 79.4% of eligible employees made contributions to their plans in 2021, an increase from 77.2% in 2020.

“It’s promising to see the recovery of organization contributions in 2021 and the continued increase in retirement plan participation from nonprofit workers,” said Hattie Greenan, director of research and communications at PSCA. “This bodes well for the resiliency of retirement plans, and for non-profit organizations and workers as we again face economic uncertainty amid market volatility and inflation.”

Additional survey findings showed not only an overall increase in deferral rates, but plan design enhancements as well as increased education and investment support for employees:

  • The average participant deferral rate climbed from 6.2% in 2020 to 6.9% in 2021.
  • Availability to make Roth contributions jumped from 49.5% in 2020 to 58.8% in 2021.
  • The percentage of plans providing immediate eligibility rose for both matching and non-matching contributions by 7% and 20%, respectively.
  • More than half (54.2%) of plans in 2021 offered investment advice, up from 41.6% in 2020.
  • Increasing overall financial literacy (30.3%) moved above increasing participation (28%) as the No. 1 purpose for providing plan education to employees

“When we look at the results of this year’s survey, we are encouraged by the increased focus among employers on financial literacy for their employees,” said Kevin Morris, vice president and chief marketing officer, Retirement and Income Solutions at Principal®. “With our commitment to enabling access to financial security for more people and organizations, we are pleased with this positive progression and increased support.”

Even after weathering the financial impacts of the COVID-19 pandemic, the average employer contribution is now higher than it was three years ago (though not yet at pre-pandemic levels). The survey found the average organization contribution per active participant was $4,887 in 2021 – up from $3,943 in the 2020 plan year.

An emerging focus for nonprofits is financial wellness, according to the study. The number of organizations providing financial wellness programs to employees increased to 22.1% in 2021 – up 37% from 2020. That includes more than half (54.3%) of large organizations with 1,000-plus employees having a comprehensive program. For those that offer a financial wellness program, 83.9% provide information on budgeting, 76.8% provide information on debt management, and 53.6% provide information on student loan debt, helping employees establish positive savings habits beyond plan participation.

“Along with increased availability of financial wellness programs, the increase in plans providing investment advice and the expanded emphasis on financial literacy demonstrates a commitment from nonprofits to provide more than a savings vehicle. They are also helping employees achieve better outcomes over the long run,” Greenan said.

The PSCA 403(b) Plan Survey is the only independent 403(b) research report that delivers actionable data on trends among plan sponsors in the nonprofit sector. For more survey results, visit