Today BrightScope is pleased to announce the Top 30 401k Plans of 2014. 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.
“We’ve seen average account balances, deferrals and participation rates steadily increase year-over year and that continues with this sixth annual ranking of top 401k plans,” said Mike Alfred, CEO & co-founder of BrightScope. “It’s encouraging to see the average plan rating also continue to improve, demonstrating employers recognize the importance a high quality 401k plan plays in helping employees retire with dignity.”
Which traits define the plans that make the Top 30 Plans List?
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. General Re, Wellington and Amgen were some of the most generous plans on the Top 30 List. The average company generosity was just under $11,000 per participant and can be in the form of a company match or profit-sharing.
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-three of the Top 30 plans offer immediate vesting of company contributions thus ensuring that the money in their account is theirs to keep.
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 3 basis points to 0.25%.
5. High Participation Rates:
The first step in saving for retirement is participating in an employer’s retirement plan. We have seen participation rates climb to almost 97% in this year’s list.
6. Salary Deferral:
Plans within the Top 30 list average over $13,600 in salary deferrals per participant. Companies can incentivize their employees to save in a number of ways. For example, in 2012, Google’s default automatic deferral percentage was 6% and they raised it to 10% in on January 1, 2013.
Statistics of the 2014 Top 30 List:
- Target Date Fund growth continues. Target Date Funds represent 5.5% of assets in the Top 30 List.
- Index Funds march on, representing 35% of assets in the List.
- We have several plans that were under $1B in assets last year and are new to the list, including General Re, UPS, Latham Watkins, and S.C. Johnson & Son.
- BP Corporation moved from 17 to 11 with the help of increased company generosity and higher salary deferrals.
The entire list of the 2014 Top 30 401k Plans with more than $1 billion in assets:
To learn more about the BrightScope 2013 Top 30 401k Plans List please contact us at firstname.lastname@example.org. This award is based on plan experience through 12/31/2013.
*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.