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Fidelity and BofA Say Participants in 401(k)s Increase Savings

May 19 (Bloomberg) -- Participants in 401(k) retirement plans increased their contributions in the first quarter as the equity markets recovered, according to reports by Fidelity Investments and Bank of America Corp.

About 7.5 percent of investors in Fidelity 401(k) plans increased their contributions, up from 5 percent in the last quarter, according to the Boston-based company, which has 11 million U.S. participants. It was the fourth straight quarter where more investors increased rather than decreased their savings rate, said the firm, the largest 401(k) provider.

“Participants are more comfortable,” said Beth McHugh, vice president of market insights at Fidelity. “They’re less concerned with some of the volatility.” The Standard & Poor’s 500 Index rose 23 percent in 2009 and increased 5 percent in the first quarter this year.

Almost 202,000 investors with Bank of America Merrill Lynch changed their contribution rate and 66 percent increased their savings or started contributing, compared with 34 percent who stopped or decreased savings, according to a report by the Charlotte, North Carolina-based company, which had $86 billion in plan assets as of March 31.

Automatic escalation of savings within retirement plans was “not a significant driver of increased contributions rates during the first quarter,” said Matt Card, a Bank of America Merrill Lynch spokesman, in an e-mail.

“Increased contribution rates to 401(k) plan accounts during the last couple of quarters is evidence of an improving economy,” said Kevin Crain, head of institutional client relationships for Bank of America Merrill Lynch.

Average Balances

At Fidelity, the average 401(k) account balance as of March 31 was $66,900, up 41 percent from a year earlier and still down from $69,200 in 2007, McHugh said. The average contribution rate by employees is 8.2 percent, according to Fidelity. Bank of America Merrill Lynch declined to provide its average account balance or contribution rate, Card said.

Participants in employer-sponsored plans had balances of $70,970 in 2009, down from $79,570 in 2007, according to an April report surveying almost 3 million employees by Hewitt Associates, a human-resources consulting firm based in Lincolnshire, Illinois.

To contact the reporter on this story: Margaret Collins in New York at mcollins45@bloomberg.net.

To contact the editor responsible for this story: Rick Levinson at rlevinson2@bloomberg.net.

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