BrightScope, a provider of financial and investment information, released its annual Top 30 401(k) plan list, which recognizes companies with the best 401(k) plans containing more than $1 billion in assets. BrightScope is a Strategic Insight business, as is Chief Investment Officer.
The top-ranked 401(k) plan for 2016 was the Delta Pilots Savings Plan, with a 92.6 rating. Delta, which didn’t even crack the top 30 in last year’s list, was boosted by a total plan cost of under 25 bps, company generosity, and salary deferrals.
The NFL Player Second Career Savings Plan was in second place, moving down a notch from the top spot in the 2015 top-30 list. In third place was The Savings Plan of Saudi Arabian Oil Company, which slid down a spot after coming in second in 2015.
BrightScope rated nearly 50,000 401(k) and 403(b) plans, covering more than 57 million workers and more than $3 trillion in assets.
“This is our eighth year compiling the year-end Top 30 ratings list, and yet again we see companies offering higher-quality plans,” said Brooks Herman, head of data and research at BrightScope. “We have witnessed average plan ratings improve each year in the Top 30 List, and this year is no different. This demonstrates that America’s employees and employers recognize how critical a high-quality 401(k) plan is to maintaining an acceptable standard of living in retirement.”
Oil companies and pharmaceutical firms dominated the list, accounting for more than half of the companies in the top 30. German pharmaceutical firm Bayer jumped 12 spots from 19 to 7 with more than $3,700 in company generosity per participant, and more than $3,000 in salary deferrals per participant.
In addition to Delta, the NFL Player Annuity Program joined the Top 30 List, as it has become a member of the NFL Player Second Career Savings Plan. Both plans are affiliated with the National Football League Players Association and the National Football League Management Council.
Among those falling out of the list were Merrill Lynch & Co., Inc. 401(K) Savings & Investment Plan, which was ranked 17th in 2015, AstraZeneca Savings and Security Plan, which was 6th, and the Agilent Technologies, Inc. 401(k) Plan, which was ranked 12th.
The plans were ranked based on six traits:
- Generous Company Contributions: Offering a match or profit sharing contribution to the plan provides incentive for employees to participate and defer their salary towards retirement.
- Immediate Plan Eligibility: Short plan eligibility requirements allow new hires to save more toward retirement.
- Immediate Vesting: Company contributions can take up to six years to vest depending upon the plan. Plans that offer immediate vesting of company contributions ensure the money in their account is theirs to keep.
- Low Fees: Plan costs can greatly affect investment returns therefore altering participant account balances.
- High Participation Rates: Average participation rate in a top-30 plan was more than 96%.
- Salary Deferral: Companies can incentivize their employees to save in a number of ways. The average salary deferral was more than $14,500 per participant in a top-30 plan.
By Michael Katz