If the right features are included, the way a retirement plan is designed can help to offset participant behavior that's reactive to market volatility instead of proactive for retirement planning.

That's part of the message in T. Rowe Price's report Reference Point, which finds that although participants didn't react well to last year's market turbulence, well-designed retirement plans managed to offset some of that behavior and result in “strong plan and participant outcomes despite the uncertainty, resulting in 2018 being a year of mixed results.”

Auto-enrollment meant that participation rates were nearly 96 percent higher in those plans than in plans that lacked the feature, and use of auto increase was nearly five times higher in plans that employ the opt-out option.

In addition, among auto-enrollment plans, almost 37 percent have a default deferral rate of 6 percent or higher, the report says, compared with nearly 33 percent at a default rate of just 3 percent.

Employer match rates overall were up, with the top effective rate of 4 percent for the first time outpacing the 3 percent rate.

Participants who saved less in 2018 decreased their deferral rates by a greater amount than those who increased their deferral rates; loan usage hit a six-year low; and hardship withdrawals fell for the ninth year in a row.

And employer matches are up, with all match rates of 4 percent or higher making gains.

But it wasn't all positive news.

Not only did the “50 percent up to 6 percent match formula f[a]ll in prevalence at a faster clip in 2018,” but participants' worries about the markets resulted in a 36 percent increase in cashout distributions—as did increased distributions of small account balances.

In addition, participation fell by almost 2 percent from 2017 to 2018, and average account balances fell by nearly 8 percent, thanks in part to those year-end market drops. Participants also moved money from stocks into more conservative investments.

Still, with a volatile market not frightening off participants across the board, it looks as if carefully designed retirement plans can protect participants from their own worst instincts in the face of fear.

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