Fidelity: 401(k) plan participants increased contributions slightly in 2011

February 09, 2012|Christine Dunn, Globe Staff

Participants in Fidelity 401(k) plans inched up the amount they were willing to save for retirement last year, bolstered by employer contributions and the rising acceptance of Target date funds, the Boston-based financial services company said.

On average, employees were willing to save more than 8 percent of their annual salaries, with the average contribution rising slightly to $5,750 in 2011, an increase from $5,680 the year before, Fidelity said. As of the end of the fourth quarter, the average 401(k) balance was $69,100, up almost 8 percent from the previous quarter.

Fidelity manages 11.6 million 401(k) participant accounts, the most in the financial services industry.

Last quarter, Fidelity also saw a higher percentage of participants receiving employer contributions — 82 percent compared with 79 percent in the same period of 2010. Employer contributions include a company match or a profit sharing program. The average employer contribution rose slightly to $3,270 from $3,170 a year earlier.

About one in four 401(k) plan participants invested all of their assets in Target date funds, a type of mutual fund that was particularly popular among participants age 35 or younger, Fidelity said.

Target date funds are a type of mutual fund that allows investors to set a date for the life of the fund. As retirement approaches, the fund moves the allocation of invested monies among the asset classes. So, for example, the mix of investments may shift from more aggressive investments early in the life of the fund to more conservative investments as the fund matures and investors approach their end date.