Defined Contribution Plans In A Post PPA Environment Employee Research Institute’s 62 nd Policy Forum May 8, 2008 David L. Wray President Profit Sharing/401k Council of America

2 Impact of the 2006 Pension Protection Act PPA Set the Table Permanence Saver’s Credit Automatic Enrollment – Utilization – Plan Design – Investment The Flaws The Future

3 Impact of the 2006 Pension Protection Act Automatic Enrollment Utilization 2007*33.3% % % % % % 73.1% New Hires Only, 26.9% All Non-Participants

4 Impact of the 2006 Pension Protection Act Design: Automatic Enrollment Deferral Percentage Year 1% 2% 3% 4% 5% 6% and up

5 Impact of the 2006 Pension Protection Act Design: Automatic Enrollment With EE Contribution Escalation %19.6% Voluntary % % %

6 Impact of the 2006 Pension Protection Act Automatic Enrollment Default Investment Year SV MMBalLife/ Other Target

7 Impact of the 2006 Pension Protection Act The Flaws $1,000 Per Day Fine For Violating Notice Req. Safe Harbor Not attractive Enough The Future Very Bright For Medium And Large Companies (78% of 401(k) participants: 2005) Doubtful For Small Companies of 250 Or less 85% participation rate already