401(k) contributions drop in troubled economy

Some 21% of participants are now contributing at a lower rate and 4% have stopped altogether, according to Putnam.
JUN 19, 2008
By  Bloomberg
While workers continue to put money into their 401(k) plans during the current downturn in the economy, they are investing at a lower rate, a survey released yesterday by Putnam Investments found. The 152 advisers that responded to the online survey, conducted in May, reported that 89% of plan participants are continuing to save and 85% of plan sponsors are continuing to provide matching contributions. But 21% of participants are now contributing at a lower rate and 4% have stopped altogether. Putnam also found that target date funds are strongly favored by plan advisers and consultants as they choose the qualified default investment alternative option. In selecting target date funds, asset allocation was the most critical factor, followed by expense ratios and glide path, the respondents indicated. Respondents indicated that open architecture within bundled plans continues to be a priority. A full 49% of the advisers and consultants indicated they serve as fiduciaries on the plans they manage. The Boston-based fund firm had $175 billion in assets under management as of May 31.

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