Fidelity Launches New Diagnostic Tool
To Help Companies Measure Employee Workplace Savings Progress and Retirement Readiness

BOSTON, July 25, 2007 - Fidelity Investments, the nation's No. 1 provider of workplace retirement savings plans¹, today announced findings from its annual state of the 401(k) industry report, Building Futures. The report showed that despite low penetration of automatic workplace savings programs, employees in plans utilizing auto features are showing significantly greater participation rates, increased savings and more diversified investment allocation.

Fidelity's Building Futures VIII revealed that just over 200,000 employees were automatically enrolled into plans as of year-end 2006 - a number twice that of 2005 levels. Employees in plans offering auto enrollment, who were eligible to be auto enrolled, had participation rates that were 28 percentage points higher than eligible employees in plans without auto enrollment. Employee contribution rates were higher in plans that automated annual increases, and lifecycle fund usage more than doubled when offered as the plan default.

"We're pleased to see that the number of employees automatically enrolled has doubled and adoption by employers is growing, but we need to remember that this is still roughly two percent of all participants, which means there's much more to be done to improve workers' retirement readiness," said Jeffrey R. Carney, president of Retirement Services for Fidelity Employer Services Company (FESCo).

Fidelity also announced the release of a new plan diagnostic tool for employers. It enables employers to measure the effectiveness of their plan in helping workers to build workplace savings levels that will sufficiently replace their income in retirement. It also shows the potential of auto programs to dramatically increase workers' income replacement levels in retirement.

Overall Employee Savings Behaviors Still Problematic

Fidelity's Building Futures VIII, a comprehensive analysis of over 10 million participants in nearly 13,000 corporate defined contribution (DC) plans administered by Fidelity in 2006 and representing $674 billion in assets, also found there is still significant cause for concern about employees' overall savings behaviors.

Considering all plans, the vast majority of which do not fully utilize auto programs, the average plan's employee participation rate fell slightly to 63.1 percent in 2006, compared with 63.4 percent in 2005. The percentage of income employees contributed to workplace savings plans remained unchanged at 7.0 percent.² Three out of four workers had investment allocations that were not properly diversified for their age, with 22 percent holding all equities, 13 percent holding no equities and 19 percent having their savings in a single non-diversified investment option. Additionally, the average 401(k) account balance increased just 6.5 percent to $66,500, from $62,500 in 2005.

"Although many employees are trying to improve their savings behaviors, these numbers prove that change can be slow and most workers urgently need the guardrails of auto programs to help ensure they will have sufficient savings to live on in retirement," said Carney.

New Tool Shows Impact of Auto Programs on Employee Income Replacement Rate

In order to help employers better understand the impact that auto solutions can have on the effectiveness of their workplace savings plan in preparing employees for retirement, Fidelity created the Retirement Income Indicator. This new diagnostic tool enables an employer to see how auto enrolling all employees, using automatic increase programs for contribution rates and providing lifecycle funds as the default investment option can improve the retirement readiness of their workforce.

"Employers today rely on traditional metrics such as employee participation rates, deferral levels, asset allocation and account balances to assess the effectiveness of their plans," said Carney. "Yet workers are being asked to think about their savings success based on how much income they can replace in retirement. That's why we decided to create a measurement tool that can show employers at an aggregate, plan level, the percentage of income employees are on track to replace from their workplace savings, and what fully automating plan design could do to improve worker income replacement levels."

Fidelity found that based on Building Futures VIII data, corporate DC employees overall are on track to achieve 17 percent income replacement.

Big Winners Were Those Who Stayed in Plan

Not surprisingly, employees who remained in their workplace savings plan for one year or more saw their 401(k) account balances increase significantly. Balances for one-year continuous participants, those who stayed in plan from year-end 2005 to year-end 2006, grew on average 20 percent from $65,300 to $78,500. Five-year continuous participants, those with balances from 2001-2006, had average account balances of $111,000, up 18 percent from $95,000 in 2005, and up 88 percent from $59,000 in 2001.

Savings Progress Varies by Generation

Baby Boomers showed some progress with slight increases in both participation and deferral rates. Surprisingly though, one in three Boomers still do not participate in their plans, and of those who do participate, most do not contribute to the max, with the average Boomer contribution level at just 7.7 percent, slightly higher than the average participant level of 7.0 percent.

Carney noted that automatic adoption will yield the greatest benefit to younger workers, given that less than one third (29 percent) of the youngest generation of today's workforce, Gen Y, are participating in their workplace plans.

On average, Gen Y workers are deferring 4.6 percent of their compensation, well below the 10 to 15 percent of pre-tax salary that Fidelity believes employees should contribute, and have saved only $6,000, on average, in their accounts. Yet, Fidelity's Retirement Income Indicator shows that the average Gen Y worker can achieve nearly 50 percent income replacement if they are part of a fully automated workplace savings plan program early in their careers.

About Building Futures VIII

Building Futures is Fidelity Investments' annual report on the state of the 401(k) industry. Volume VIII provides a comprehensive analysis of over 10 million participants in nearly 13,000 plans administered by Fidelity at the end of 2006, representing $674 billion in assets. The full report will be published this fall.

About Fidelity Employer Services Company

Fidelity Employer Services Company (FESCo) is a division of Fidelity Investments. FESCo provides defined contribution and defined benefit retirement services, employer benefits and human resources administration, and payroll services to approximately 21 million participants in the United States as of June 30, 2007.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $3.2 trillion, including managed assets of $1.5 trillion as of June 30, 2007. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to more than 23 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

¹This statement is based on the results of independent media surveys conducted by Pensions & Investments (2005 & 2006), Strategic Insight (2005), and Defined Contribution & Savings Plan Alert (2006).

²Historic 2005 figures for participation and deferral rates were restated slightly relative to what was published in Building Futures VII to incorporate a larger set of eligible employee data; the actual impact was small and trends were unchanged.

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Fidelity Investments Institutional Services Company
82 Devonshire Street, Boston MA 02109