Participation in 401(k) plans has declined by 13% in the past six years, according to research by Spectrem Group released Tuesday.
The study by Spectrem, a Chicago research firm, said participation in 401(k) plans stood at 80% of those eligible in 1999 but had fallen to 70% by 2005. Further, the share of salary put into 401(k) plans, known as the deferral rate, declined by 20% in this period. The average deferral rate fell from 8.6% in 1999 to 6.9% in 2005.
George H. Walper Jr., the president of Spectrem Group, said workers appeared to be "losing their taste for 401(k) retirement savings." Whether poor market conditions, eroding enthusiasm for the product, or other factors are to blame, he said, "declines of this magnitude could mean that many of today's workers will find themselves ill-prepared for retirement."
The study was based on telephone interviews during the fourth quarter with people responsible for defined contribution plans at 500 companies of all sizes.
