Bank of America Merrill Lynch said that it saw increased 401(k) participation through its plan sponsors both in the fourth quarter and 2011 year, signaling a positive outlook for the tweaks it has made to its offerings and confidence in the overall economy.
Plan participants took the most positive action when it came to their 401(k) contributions—starting or increasing their savings—in the fourth quarter compared to the rest of the year, with 81%, or 442,470 participants, versus 19%, or 107,170, who decreased or stopped their savings.
For the full year, 76% of plan participants started or increased their savings during the full year, versus 24% who stopped or decreased their savings rate.
The firm’s 401(k) business has about 2.6 million total plan participants who have invested, and $92.4 billion in total plan assets. Almost 1.5 million participants currently contribute to their 401(k) plans.
Both the fourth quarter and annual results show a continued strong pace and positive attitude from plan participants, according to Kevin Crain, head of institutional retirement and benefit services at Bank of America Merrill Lynch.
“If they’re going to do something in the plan, they’re doing positive things versus negative things,” Crain said.
The full-year results were about equal to 2010, while the fourth quarter results reflected a boost from the firm’s efforts to tie in 401(k) plan changes at the time an employee completes their annual health care enrollment.
The annual health care enrollment process accounted for almost 330,000 employees who changed their retirement savings in the fourth quarter. That included the enrollment of 84,000 new participants.
The 2011 results from the health care enrollment process were almost equal to 2010’s results, the firm said, coming in at a rate of 90% starting or increasing contributions versus 10% who stopped or decreased their savings rate.
Bank of America Merrill Lynch also saw a boost from its other efforts aiming to make it easier for employees to change their 401(k) plan elections. Year-over-year, the firm saw a 14% increase in the adoption of auto enrollment and a 21% rise in auto increase.
In all four areas where Bank of America Merrill Lynch has boosted its efforts—advice, auto enroll, auto increase and annual health care—participants tend to take action without a large volume of communication coming at them, Crain said.
“It’s basically give them the tool, make it really easy for them to do it, hit them at the right point and they do it,” Crain said.
The numbers that were on par with 2010 may be a sign of positive saturation, according to Crain, such as where participants increased their savings and did not need to do so again the following year. But the numbers still point to large and consistent participation, he said, as with the 900,000 employees taking positive savings action in 2011 versus 875,000 in 2010.
“These are great numbers, and even if they’re moderate year over year, it’s still big bulks of participants doing the right thing,” Crain said.
Since Bank of America Merrill Lynch began its program eight years ago, it has consistently seen double-digit percentage growth from corporations and plan sponsors who have added the advice to their plans. That points to their desire to make participation easy for their employees, Crain said.
Engagement from the participants points to renewed confidence in their ability to save, a trend that Crain said the firm began seeing in 2010.
“What we’re doing here with plan sponsors and ultimately employees is really, as early as we can, starting their roads towards ensuring financial security throughout all the stages of their life,” Crain said. “When they reach retirement, they’d really be in a good place.”
Bank of America Merrill Lynch has also unveiled a new video five-part video series aimed at helping plan sponsors brush up on issues affecting the industry. The video series will likely be updated annually or semiannually, Crain said.
Lorie Konish writes for On Wall Street.