MassMutual Retirement Services Data Shows Women in 401(k) Plans are Saving More, Borrowing Less
Gen Y Participants Also Accelerating Savings Rates
May 8, 2012
(Springfield, MA) - MassMutual’s Retirement Services Division data for the first quarter 2012 indicates that two segments of its defined contribution plan participants are increasing their savings levels at a higher rate than participants overall. For the quarter ended March 31, 2012, women increased their deferral rates at twice the level of men (4 basis point average increase for women vs. 2 basis point average increase for men).
In defined contribution plans administered by MassMutual, 4.22% of participants increased their deferral percentage during the first quarter, marking the second highest percentage in a single quarter since measurement began in 2007. In terms of age groups, as would be expected, average deferral rates for the youngest savers (3.58%) are lower than older participants (7.18%); however, the savings rates for Gen Y are increasing at an accelerated rate. Participants age 29 and under increased their savings levels by 2.29% vs. participants age 60 and over who increased by only .42%. Participants aged 40 – 49 had the second highest savings level increase of .57% to an average deferral rate of 5.27%. Also encouraging is that only 1.30% of participants overall decreased their deferral percentage during the quarter and only 2.98% stopped deferring.
The percentage of total participant assets in MassMutual’s target date and risk-based options reached an all-time high during the first quarter of 2012, accounting for 24.7% of total retirement assets under management, which is well above the industry average. Women continue to favor age-based investments far more than risk-based options – in fact, more than 2.5 times as much – at 72% vs. 28% respectively. Men remain more evenly divided on their preferences, with approximately 53% in age-based vs. 46% in risk-based investments. Average account balances for women rose 7.93% for the quarter vs. 7.27% for men, and the gender gap is closing in terms of account balances. Average account balances for women now trail those of men by 38.8% compared to 40.5% in late 2010.
While recent industry reports have cited increased loan activity among retirement plan participants in general, at MassMutual, the combined percentage of participants who initiated loans (1.26%) and hardships or other withdrawals (0.66%) was at its lowest level since 2007. This data suggests that MassMutual participants understand that borrowing against their retirement savings account can have a negative effect on their efforts to achieve long-term retirement income success. Also of note for the quarter, there was no significant difference in loan and withdrawal rates between men and women. Historically, women have taken greater percentages of loans and withdrawals. These declining rates for women also contributed to helping close the average account balance disparity between male and female participants.
“We believe the positive trends we are seeing in the first quarter reflect MassMutual’s true value as a retirement plan provider – helping participants understand what it will take for them to calculate and save towards sufficient income levels in retirement,” says Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman and CEO of MassMutual International LLC. “Participants on our platform are taking positive actions towards their retirement savings goals. Deferral percentages are up, with the greatest increase coming from Gen Y, and participants are letting their money work for them by avoiding loans, withdrawals and other behaviors that can have a negative impact,” she adds.
MassMutual serves approximately 1.6 million participants. For more information regarding MassMutual Retirement Services, please call your retirement plan advisor or contact MassMutual at 1-866-444-2601.
Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual is headquartered in Springfield, Massachusetts and its major affiliates include: Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MassMutual International LLC; MML Investors Services, LLC, Member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust Company, FSB.
MassMutual’s Retirement Services Division has been serving retirement plans for 65 years. It offers a full range of products and services for corporate, union, nonprofit and governmental employers' defined benefit, defined contribution and nonqualified deferred compensation plans. It serves approximately 1.6 million participants.