More than half of participants earning up to $199,999 annually were on track to retirement readiness. These numbers include even the lowest earners, although projections do include expected Social Security benefits, which by themselves can replace a substantial portion of a low to moderate earner's income. The sweet spot is those earning from $50,000 to $149,000, where rates were approaching 60 percent. In the highest brackets, lower scores were likely because IRS contribution limits become a headwind.

The report revealed several trends among participants:

Turnover. Plan participant turnover was highest among younger workers and lowest for 50-somethings.

As the nation moved through the COVID-19 pandemic and into the Great Resignation, U.S. total annual separations levels — the percentage of employees leaving their jobs over the course of the year — started at 45 percent in 2019, rose to 57 percent in 2020 amid employer job actions at the height of pandemic, and then dipped to 47 percent in 2021 as business recovered its footing and ample new job openings prompted churn across the workforce.

DC plan turnover was lowest among participants aged 50 to 59 in five industries – materials, banking, finance and insurance, law firms, communications and technology.

Plan turnover among middle-aged participants in these five industries also diverged from the national separations-rate pattern. Three industries experienced two-year rises in participant turnover, including a 20-percentage point increase among communications firms from 2020 to 2021.

When participants leave their DC plans, they face one of the most crucial and underappreciated decisions in their retirement saving career: what to do with the money. A look at the percentages of distributions taken in cash vs. being rolled over to an IRA or to a new employer's plan shows that many participants understand how to protect their hard-earned assets, but that there's also ample room for investment education and guidance.

Auto features continue to fuel participant progress. When used in tandem, auto-enrollment and auto-increase features greatly enhance a DC plan participant's likelihood of achieving retirement readiness.

Recognizing this fact, Congress has included mandatory use of both features in new 401(k) plans in its proposed SECURE Act 2.0 provisions. A comparison of 2020 and 2022 plan-level figures shows that the benefit of implementing auto features is more profound than ever.

Self-directed participants choose to invest conservatively. DC plan participants who select their own individual investments — outside of target-date and target-risk funds, custom portfolios and managed accounts — tend to hold a smaller share of equities than recommended. Only 20 percent of participants are investing the recommended amount in equities.

ESG funds established a beachhead. In October 2021, the U.S. Department of Labor proposed a change to ERISA that would officially allow fiduciaries to consider environmental, social and governance factors in selecting funds for their DC plan lineups.

Stable-value fund ownership remains a popular high interest rate option. Stable-value funds seek to offer a higher yield than money market funds and short to intermediate bond-like performance, all with an insurance-backed guarantee. A fund manager's ability to adjust the duration of a stable-value fund's bond holdings can help make them a good hedge against inflation.

"If there's one thing the last year has proved, it's that DC plans have become a viable pathway to retirement for American workers," the report concluded.

"Thanks to the support of plan sponsors and financial professionals, participants of all ages and occupations are keeping their eyes on the target, staying committed and positioning themselves to create the retirement income they'll need."