Today BrightScope is pleased to announce the Top 30 401k Plans of 2011. BrightScope’s Top 30 list comprises large 401k plans with high overall quality, as measured by the BrightScope Rating. The BrightScope Rating measures how effective a 401k plan is at getting its participants to retirement. More details about the BrightScope Rating can be obtained in the FAQ section of the BrightScope website.
Which traits define the plans that make the Top 30 Plans list ? Here is a quick analysis of the factors that drove top BrightScope Ratings:
1. Generous Company Contributions:
Company contributions are a major component of the BrightScope Rating and thus the Top 30 Plans List. Offering a match or profit sharing contribution to the plan is a great incentive for employees to participate and defer their salary towards retirement. The top plan on the Top 30 list, the Southwest Airlines Pilots’ Retirement Savings Plan , matches 100% of elective deferrals up to 9.3% of the participant’s income. This is a substantial increase when compared to last year’s contribution (100% of 7.8% of income). Company generosity for all plan in the Top 30 list has risen significantly from an average of approximately $8,000 per participant to over $11,000 per participant. Clearly company match is back in a big way.
2. Immediate Plan Eligibility:
A plan’s eligibility period is the length of time between when an employee is hired and when they are eligible to participate in the plan. Short plan eligibility requirements allow new hires to save more towards retirement. This year’s Top 30 list includes twenty-four plans with immediate eligibility. Removing barriers to saving is clearly important to the top plans.
3. Immediate Vesting:
While a participant’s elective deferrals are always immediately vested, company contributions can take up to six years to vest depending upon the plan. Twenty-five of the Top 30 plans offer immediate vesting of company contributions thus ensuring that the money in their account is theirs to keep. The Bristol-Myers Squibb Company Savings and Investment Program is the only plan within the Top 30 list that requires five years of employment to become fully vested.
4. Low Fees:
Plan costs can greatly affect investment returns therefore altering participant account balances. BrightScope’s Total Plan Cost (TPC) calculations include investment expense ratios, administrative costs and also fund-level trading and transaction costs. Among plans found in this year’s Top 30 list, the average Total Plan Cost has dropped by 5 basis points to 0.61%. The ExxonMobil Savings Plan has the lowest Total Plan Cost. This is largely due to the company paying for most plan expenses instead of passing that cost to the participants. Many companies within the Top 30 list pay for plan administration expenses in order to provide a plan with low and competitive fees.
5. High Participation Rates:
The first step in saving for retirement is participating in an employer’s retirement plan. It comes as no surprise that all plans within the Top 30 list have high participation rates. Seven plans have a participation rate of 99% or greater. The following four plans have participation rates of 100%: Wellington Retirement and Pension Plan, Amgen Retirement and Savings Plan, ExxonMobil Savings Plan, & the Ernst & Young Partnership Retirement Plan.
6. High Salary Deferrals:
Plans within the 2011 Top 30 list average over $11,600 of salary deferrals per participant. While the salary deferral average is down slightly when compared to last year’s list, it is more than 320% higher than the average defined contribution plan within BrightScope’s database.
Congratulations to the companies that are represented on the list! The Top 30 401k Plans clearly serve as a model for how to encourage proper saving and investing behavior among employees.
The BrightScope 2011 Top 30 401k Plans List:
To learn more about the BrightScope 2011 Top 30 401k Plans List please contact us at firstname.lastname@example.org. This award is based on plan experience through 12/31/2010.
*DISCLAIMER: Ratings continually change as data is updated over time. Ratings should be viewed as a “snapshot in time.” To view current ratings information for a given plan click to view the companies plan page. The rating on the plan page may not match the rating at the time of the release of the rankings.