Fidelity-401(k) balances up as contributions resume

Fidelity disclosed the results in its quarterly retirement-savings survey on Wednesday. The Boston mutual fund giant is the largest administrator of savings plans, making its survey a useful barometer of industry trends.

The average account balance in the 401(k) plans surveyed by Fidelity stood at $66,900 at the end of the first quarter, up 41 percent from the same point a year ago.

The increase was even higher on March 9, 2010, a year to the day after major U.S. market indexes hit a 12-year low. From their low, account balances were up 55 percent to $71,600, Fidelity said.

One criticism of 401(k) plans has been that savers are least able to afford to contribute to them when stocks are cheapest -- during recessions -- according to retirement-policy specialists.

Many 401(k) contributors lost their jobs during the recession as corporations slashed payrolls. Some companies also suspended the matching funds programs that help beef up retirement account balances.

Fidelity's findings offered some data to both sides of the discussion. It found that of the 4.2 percent of participants who stopped contributing to 401(k)s in the six months between October 2008 and March of 2009, about 40 percent had resumed at least some contributions by March 31 of this year.

Plan participants returned for a number of reasons, said Fidelity vice-president Beth McHugh.

The economic recovery has allowed more people to put savings aside, while employers have begun to restore matches to 401(k) plans, giving them additional reasons to save. Also, recovering markets reinforce savings confidence, she said.

Fidelity also found more participants using so-called target-date funds that adjust an investors' exposure to risk based on their age.

In addition, Fidelity said that of the 1.6 percent of plan participants who moved completely out of stocks during the financial crisis, nearly 40 percent moved at least some portion of their holdings back to equities.

Fidelity manages retirement plans for about 11 million retirement-plan participants across 17,000 companies, and has more than $3 trillion in total assets under custody.

(Reporting by Ross Kerber, editing by Bernard Orr)