Retirement plan contributions slipped in 2022, survey shows

Contributions to retirement plans fell last year following record contribution rates from participants and employers in 2021, according to a survey of 401(k) plans released Thursday by the Plan Sponsor Council of America.

Despite slipping contribution rates, however, the study showed that participation remains strong, even if down from record highs levels seen in recent years.

The PSCA’s 66th Annual Survey of 401(k) and Profit Sharing Plans showed nearly 90% of eligible employees had 401(k) accounts and 85.6% made contributions in 2022.

The combined employer and employee contribution rate was 12.1%, down from 15.3% in 2021. And while the average employer contribution slipped to below 5% of pay, an impressive 96.2% of companies still made planned matching contributions, the survey said.

“Last year we stated that the strength of the system going into 2022, with record levels of contributions and adoption of participant support designs, would help buffer retirement savings against any economic downturn,” Hattie Greenan, director of research and communications at PSCA, said in a statement. "For now that seems to be the case."

The study showed that Roth after-tax contributions are now available in 90% of plans. Moreover, the availability of automatic enrollment increased in 2022 and it's now used in 64% of plans, continuing the growth seen over the past decade.

As for investments, the study shows 83% of plans are using an independent investment advisor to help with fiduciary responsibility, up from 76.8% in 2021. There also was a slight rise in the availability of retirement income products and ESG funds, the report said.

“Despite economic challenges, plan sponsors moved forward in implementing design features to support participants — features that have become best practices over the last several years continue to take hold,” Will Hansen, PSCA’s executive director, said in the statement. “We also saw an increased focus on investments as employers are thoughtfully considering the best options for their participants for long-term financial success.”