So here’s what I’ve been watching—because if you’re a fiduciary, you don’t just watch these numbers, you study them. According to the latest Plan Sponsor Council of America (PSCA) survey, employee participation in workplace 401(k) plans has climbed—even amid economic unease. That’s good. Really good. But if you’re in the trenches of plan design and sponsor oversight? I say: let’s treat this like a checkered flag at the finish line, not a parade.
1. The Headlines
Here’s what the survey shows:
· Participation rate ticked up to 87.4% of eligible employees contributing in 2024 (up from 86.9% in 2023).
· Average employee deferral: 7.7% of pay (down from 7.8% in 2023).
· Employer contributions averaged 4.8% of pay, a slight drop from 4.9%.
· Total average savings (employee + employer): ~12.5% of pay.
· The features are expanding: automatic enrollment now used by 64% of plans; 95.6% of plans offer Roth 401(k); 73% have adopted “super catch-up” (ages 60-63).
2. What This Means in Rosenbaum-Speak
Let me translate “the numbers are up” into what it means for you, the fiduciary, the plan sponsor, the compliance person holding the coffee mug at 8 a.m.
Good news:
· You’re winning the participation battle. Jump from 86.9% to 87.4% might seem incremental, but in the world of DC plan participation that’s meaningful.
· The uptake of auto-features and SECURE 2.0 provisions (like super-catch-up, Roth employer contributions, feasibility of emergency/withdrawal features) shows sponsors are using design levers.
· More participants means broader coverage, better normalization of deferrals, and stronger culture of saving. That’s the kind of outcome a sponsor wants when litigation risk is lurking.
But the caveats:
· The average deferral rate is flat to slightly down. So more people are participating, but they’re saving less (on average) than perhaps we’d hope for.
· Employer contributions being down—even if only slightly—raise questions: Are match formulas lagging? Are cost pressures nudging the employer to “tighten up”?
· Participation rates are only part of the story. Coverage quality, deferral rate adequacy, investment lineup, communication, operation—all of those still matter. And they’re the places where sponsors still trip.
3. Strategic Implications (For Your Committee, Your TPA, Your Recordkeeper)
Here are the practical action items I always push when I see this kind of data:
· Run the deferral-rate trend: Participation is high, but deferral rates are modest. What plan design changes (auto-increase, default target percentage, tiered match) can lift the average from 7.7% toward the 10%-plus range you really want for retirement readiness?
· Check employer contribution design: Given contributions averaged 4.8% of pay, make sure your match or profit-sharing design is competitive, sustainable, and aligns with your talent-attraction/retention strategy. If you’re seeing match erosion, ask why.
· Review auto-features & default settings: 64% adoption of auto enrollment is solid—but what are the default deferral rates? What portion of auto-escalations are in place? Are you among the sponsors doing this? Because the numbers say the sponsorship of design matters.
· Audit operation of new SECURE 2.0 features: With things like super catch-up, Roth employer contributions, emergency withdrawals, disaster withdrawals gaining traction, ensure your systems, disclosures, vendor contracts, and operational practices are aligned. These features open up new benefits — but also new error-spaces.
· Communication to participants equals culture: With more people participating, it’s a huge opportunity: target the “average deferrer” and move them into “above average” mindsets. Use the fact of rising participation as proof: “Your peers are doing this, you should too.”
4. Final Word
Yes, I’ll raise my mug and toast: this data is encouraging for the defined contribution world. But in Ary Rosenbaum terms, you don’t relax—you recalibrate. High participation without strong operational design and robust savings behavior is like a runner crossing the 20-mile mark strong but realizing they skipped water stations.
So whether you’re sitting in the audit committee room, the HR director’s office, or the TPA war room this week, remember: use this uptick in participation as the springboard, not the conclusion. Your mission remains: more savings, better design, fewer errors—and a plan that doesn’t just exist, but delivers.
