Despite turbulence, workers stick with plans

Despite market volatility, the amount of money that employees contributed to their defined contribution plans in the first half of 2008 increased, according to an analysis released today from Boston-based Fidelity Investments. However, owing to market declines, account balances shrank 7.5% in the past 12 months. The analysis found that the average pretax amount employees contributed in the first half of 2008 increased by 1.4% to $3,187, compared with $3,142 in the first half of 2007. The average balance was down to $64,000 at the end of June 2008, from $69,200 at the end of June 2007. The average account balance at the end of June 2008 for employees who stayed in their plans for both years was down less than 1% to $71,500, from $72,000 in 2007. “There is no doubt that American workers are feeling the pressure from escalating energy and food prices, as well as a slumping real estate market, but the majority are making retirement a priority and staying the course,” Scott B. David, president of retirement services at Fidelity Investments, said in a statement. Meanwhile, loan activity also decreased, according to analysis of Fidelity’s 16,723 corporate defined contribution plans, which represent 11.5 million participants.