Automatic enrollment, higher default deferral rates, and stronger employer contributions have reshaped America’s defined contribution retirement plan system over the past 25 years — and Vanguard’s latest data shows just how much.
The firm’s 25th annual How America Saves report, covered in a recent PlanAdviser article, found that DC plan participation has risen to 86%, up from 65% a quarter century ago. The participation rate grew by 1 percentage point over the year and by 5 percentage points since 2017.
“We’ve really shifted from a system that relies on individual actions to one powered by automatic solutions,” said Jeff Clark, Vanguard’s head of defined contribution research and the report’s author. “These stronger defaults continue to drive better outcomes for American workers.”
Default rates have climbed alongside participation. In 2025, 62% of plans defaulted employees at a deferral rate of at least 4%, compared with 43% a decade earlier. And 71% of plans that use automatic enrollment also increased participants’ deferral rates annually.
The combined average employee and employer contribution rate hit an all-time high of 12.1% last year, with the average employee deferral at 7.6% and the average employer match reaching a record 4.7% of pay. In 2025 alone, 45% of participants increased their savings rate. Average balances rose 13% year-over-year to $167,970, while the median—lower at $44,115—still increased 16%.
Professional management has become the norm, with a record 69% of participants invested in a professionally managed allocation in 2025, up from just 9% in 2005. Of those, 62% were in a single target-date fund or balanced fund. Mr. Clark credits the rise partly to the connection between professional management and defaults: nearly all (98%) plans with auto-enrollment defaulted participants into a TDF last year.
Participants also stayed the course during periods of volatility. Only 5% made trades in 2025, down from 10% during 2020, and participants invested solely in target-date funds were even steadier—just 1% changed their investments last year.
Roth contributions continued to attract interest, with 98% of Vanguard plans offering the option and 18% of participants electing it. Younger participants—those between 25 and 34—were the most likely to use Roth, a trend Mr. Clark said is worth watching as the SECURE 2.0 mandate requiring higher earners to make catch-up contributions on a Roth basis takes effect.
Vanguard drew data from more than 1,300 qualified plans covering nearly five million participants. Plan sizes ranged from fewer than 500 participants to more than 5,000.
For plan sponsors and fiduciaries, the broader message is clear: plan design decisions matter. Automatic enrollment, thoughtful default rates, annual escalation, employer contributions, and qualified default investment alternatives are not simply operational features. They are tools that can meaningfully influence participation, savings behavior, investment discipline, and long-term retirement readiness.
As retirement plan litigation, employee financial stress, and retirement readiness concerns continue to shape the defined contribution landscape, Vanguard’s data reinforces an important point: better outcomes are often driven less by asking employees to do more on their own, and more by building plans that help them make progress automatically.
