Employer matching can encourage how much money participants invest in their 401(k) retirement accounts, even when the employer's total contribution remains the same, finds a new Principal Financial Group analysis.
"The data tells us that while the employer contribution stays at 2 percent, the higher target deferral in the match formula is spurring participants to save more," says Barrie Christman, vice president of individual investor services at The Principal. "This is significant because it shows that employers can incent better savings behavior without having to increase their costs."
According to the analysis, changing the matching contribution to a higher level also does not discourage participation. In a sample group of contributing participants who have an employer match, 43 percent of those participants contribute 6-10 percent while 26 percent contribute 11-15 percent.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
- Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
- Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
