Today BrightScope is pleased to announce the Top 30 401k Plans of 2012. 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 #1 Plan, Marathon Oil Company Thrift Plan, matches 100% of the first 7% contributed to the plan for an average Company Contribution of over $23,000 per participant. This generosity, in turn, helped push the average salary deferral for the plan to over $38,000 per participant. The average company generosity for a Top 30 Plan in 2012 is over $12,100.
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 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-one of the Top 30 plans offer immediate vesting of company contributions thus ensuring that the money in their account is theirs to keep. There are two plans on the Top 30 list that requires six 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 and administrative costs. Among plans found in this year’s Top 30 list, the average Total Plan Cost has dropped by 1.5 basis points to 0.29%. GlaxoSmithKline Retirement Savings Plan has the lowest Total Plan Cost at just 6 basis points, as the company pays for some plan expenses directly from corporate treasury.
5. High Participation Rates:
The first step in saving for retirement is participating in an employer’s retirement plan. Five plans have 100% participation rate this year, including ExxonMobil Savings Plan, Wellington Retirement and Pension Plan, Amgen Retirement and Savings Plan, Ernst & Young Partnership Retirement Plan, and GlaxoSmithKline Retirement Savings Plan. We have seen participation rates climb from 93.5% in the 2010 Top 30 List to 95.3% in this year’s list.
6. High Salary Deferrals:
Plans within the 2012 Top 30 list average over $12,700 in salary deferrals per participant, up from $11,600 in 2011. The 2012 list has an average company generosity that is over 300% more generous than other 401(k) plans with $1 billion in assets or higher.
The entire list of the 2012 Top 30 401k Plans with more than $1 billion in assets:
To learn more about the BrightScope 2012 Top 30 401k Plans List please contact us at firstname.lastname@example.org. This award is based on plan experience through 12/31/2011.
*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.