The existence of a match or discretionary employer contribution is a powerful incentive for participants to contribute to their accounts. The increase in dollar contributions by employers during 2010 is a good indication that they are still committed to the success of their plans. The drop in the overall percentage of employer contributions to participant accounts may reflect the increased adoption of automatic services. For example, auto-enrollment would increase total contributions in dollar terms while bringing in participants at a low deferral rate.

Looking Forward

Any continued economic uncertainty may put a damper on the recovery in employer contributions. Going forward, sponsors should encourage participants to save regardless of the status of their match.

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