Plan sponsors see the benefits of automatic enrollment and continue to adopt it, according to Bank of America Merrill Lynch.
Its 401(k) Wellness Scorecard finds that the number of plans offering auto-enrollment increased 16% in 2013.
Many also are adopting automatic contribution increases, making it easier for employees to defer more over time. The number of plans offering auto-increase grew 25% in 2013, and the number that combine auto-enrollment with automatic increases grew 20%.
Bank of America Merrill Lynch’s research indicates that auto-enrolled participants have become more likely to boost their contribution rates on their own.
Since the beginning of 2012, 41% of auto-enrolled participants without auto-increase have voluntarily increased their contribution rates. In 2011, the figure was only 25%.
“Our findings suggest that employers looking to support employees’ financial wellness might consider offering a broader selection of plan design features, such as automatic enrollment, automatic contribution increases and advice,” states the report.
The increase in participation rates for plans that offer a wide range of features was between 21% and 114%, while the increase in contribution rates for plans that offer a wide range of features was between 9% and 50%.
Related articles: