While it's been generally acknowledged that a high rate of participation is the appropriate benchmark to gauge the success of an employer-sponsored DC plan, a new research project has revealed that other factors might be better used to measure 401(k) plan success.
Diversified recently polled a swath of plan sponsors and found that, to the contrary, participation rates are no longer seen as the primary driving factor in plan success. This year's survey showed that only 52 percent of plan sponsors judge participation rates as the appropriate benchmark, down considerably from 2011.
Higher deferrals - not to mention improved participation rates - may also be enhanced through some basic financial educational efforts for employees, which could employ the help of a seasoned advisor.
"Too many times, employees are inclined to react to short-term financial events, and they tend to get upset by what's happening now. Look at what happened in 1972 or even in 2009. But if you look at the 90-year performance of the stock market, even 1972 was very insignificant, and the current market could even be a buy-in opportunity. Either way, they need to stay focused on the long term."