Higher contributions, better balances among 403(b) plans

While the survey uncovered many positive developments in the 2014 plan year, adoption of some plan features remained stagnant. Just 16.2 percent of 403(b) plans use automatic enrollment, up slightly from last year's 16 percent.

"The low take-up rate on automatic enrollment for 403(b) plans continues to be disappointing. It greatly lags that of 401(k) plans, which sits at more than 50 percent," says Aaron Friedman, national tax-exempt practice leader at Principal Financial. "There's definite room for improvement here, and an opportunity for advisors to work with plan sponsors to design plans that help create the best outcomes for participants."  

While the number of plans adopting automatic enrollment remains low, those that have are migrating toward more appropriate savings rates: 20.3 percent of plans with automatic enrollment set the default at 5 percent of pay or greater, which is up from 16.9 percent in 2013.

Other key findings from the survey include:

• The availability of Roth contributions has more than doubled in the last five years with 25.2 percent of 403(b) plans currently permitting the after-tax contributions.  

• Half of plans with 1,000 or more participants offer the Roth feature, while only 10.9 percent of organizations with fewer than 50 participants offer it; 10.8 percent of participants made Roth contributions when permitted.

• The most popular services provided to participants via their mobile devices include balance inquiries (12.7 percent), investment changes (9.6 percent) and plan inquiries (9.3 percent).

• Nearly half (46.7 percent) of organizations use an independent retirement plan advisor separate from their service provider. The most common services provided include investments (73.6 percent), plan design (64.4 percent), participant education (60.3 percent) and provider selection (52.3 percent).