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U.S. 401(k) plans that feature automatic enrolment continue to yield higher plan member participation rates (86 per cent) than plans without auto-enrolment (37 per cent), according to a new report by T. Rowe Price Group Inc.

The report, which analyzed the firm’s 2022 client data, found the adoption of auto-enrolment by 401(k) plan sponsors rose to 85 per cent, continuing an eight-year trend, while the adoption of auto-escalation increased to 49 per cent, up very slightly from 48 per cent in 2021.

The average 401(k) balance decreased from US$124,000 in 2021 to $101,000 in 2022, representing an 18 per cent drop. Account balances for participants aged 70 and older decreased by an average of eight per cent, according to the report, which noted the drop was likely due to these plan members allocating more to money market/stable value and less in stocks, which suffered the greatest losses in 2022.

Read: 76% of U.S. DC pension plan sponsors offering auto-enrolment: survey

The report also found the vast majority (97 per cent) of plans offer target-date funds, with 44 per cent of overall assets invested in a target-date fund.

And while hardship withdrawals returned to pre-pandemic levels in 2022 — increasing to 1.3 per cent from 0.9 per cent in 2021 — the average withdrawal amount decreased to $9,006 from a 10-year high of $10,554 in 2021.

“With market volatility caused by war, significant inflation and fears of a recession, the challenges in 2022 were enough to unsettle even the most prepared retirement savers,” said Kevin Collins, head of retirement plan services at T. Rowe Price, in a press release. “But through it all, it was encouraging to see that participants largely stayed the course and that [automatic features] continued to be an effective strategy in keeping participants enrolled and investing toward their retirement.”

Read: A look at the landscape for automatic features in Canadian pension plans