One area in defined contribution plans that varies widely from employer to employer is that of matching contributions.

Those are among the findings in in the 15th anniversary edition of “How America Saves,” Vanguard’s annual defined contribution report, released in tandem with the 10th anniversary of the Pension Protection Act.

In addition to exploring other aspects of defined contribution plans, the report looked at plans offering matching contributions, those offering nonmatching employer contributions and plans to which the employer made no contribution at all.

Some plans offer both a matching contribution, in which the employee has to put in a specific percentage of pay in order to receive the match, and a nonmatching contribution, which often carries restrictions such as a waiting period before the employee is eligible to receive the matching funds.

Most common were plans offering a matching contribution, with 48 percent falling into this category, covering 51 percent of participants. Ten percent of plans, covering just 2 percent of participants, provided only nonmatching contributions, while 37 percent of plans covering 46 percent of participants provided both matching and nonmatching contributions.

When it comes to matching contributions and the formulas that determine how much employees will receive, there’s nothing if not variation. Vanguard reported that in 2015 it administered “more than 225 distinct match formulas for plans offering an employer match.”

The promised value of the match, the study found, varies substantially from plan to plan. Among plans with single- or multitier match formulas, four in 10 (covering 45 percent of participants) promised a match of between 3 and 6 percent of pay, with most promising matches between 1 and 6 percent of pay.

The average value of the promised match was 4.1 percent of pay; the median value was 3 percent. Average promised matches fell slightly in 2009 following the recession, with some sponsors reducing matches. Average and median promised matches have remained fairly stable between 2006 and 2015, the study said.

Instant Insights /

Lots of variation in DC plan matching contributions, report says

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