More U.S. defined contribution plans have implemented auto enrollment and auto escalation, according to a survey from the Defined Contribution Institutional Investment Association.
Of the 194 DC plan executives surveyed in the fall of 2016 and early 2017 for the fourth biennial survey on automatic features, 52% have implemented auto enrollment, compared to the 45% of the 471 DC plan executives surveyed in 2014. Among plans with $1 billion or more in assets, the number has remained steady at 64%. Among plans with between $200 million and $1 billion in assets, that number has increased to 70% in 2016 compared to 55% in 2014, while 64% of plans with between $50 million and $200 million in assets have implemented auto enrollment, compared with 59% in 2014.
For plans between $5 million and $50 million in assets, 58% have implemented auto enrollment compared with 38% in 2014, and among plans with less than $5 million in assets, 29% have implemented auto enrollment compared with 24% in 2014.
Default savings rates for auto enrollment are rising as well. The report on survey results said 28% of plans set the default rate at 6% in 2016, compared with 9% in the first survey in 2010. The most frequent savings rate in that survey was 3%, with 55% of plans saying that was the default rate, which has fallen to 32% in 2016.
Meanwhile, auto escalation implementation is also increasing, with a total of 42% of 2016 survey respondents saying they have done so, compared to 31% in 2014. Among plans with more than $200 million in assets, 59% have implemented auto escalation in 2016 compared to 48% in 2014, and among plans with fewer than $200 million in assets, 32% have implemented it compared to 20% in 2014.
The DC plans surveyed include 401(k), 457, 403(b) and 401(a) plans.
The survey results are available on DCIIA's website.