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Employee Participation in 401(k)s Decreases to 70%

Employee participation in 401(k) plans continued to decrease in 2005, to a participation rate of 70%, down 12.5% from 80% in 1999, and the percentage of salary contributed has fallen 20% in that time, from 8.6% to 6.9%, according to the Spectrem Group study, "2005 Defined Contribution Market Needs."

"Workers appear to be losing their taste for 401(k) retirement savings," said George H. Walper, Jr., president of Spectrem Group. "Whether due to decreased enthusiasm for market exposure following the burst of the Internet bubble, generally poor market performance since that time, or other factors, declines of this magnitude could mean that many of today's workers will find themselves ill-prepared for retirement."

The study was conducted via telephone interviews in the fourth quarter of last year with individuals who are in charge of the defined contribution plans at 500 different companies.

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