MIAMI — The use of automatic enrollment and automatic deferral increases in defined contribution plans might be voted into law by Congress next year.
That was one of the predictions of James M. Delaplane Jr., partner, benefits group, Davis & Harmon LLP, Washington, in his keynote address at Pensions & Investments' 13th Annual East Coast Defined Contribution/401(k) Plan Conference on Feb. 25.
Mr. Delaplane said Congress has "in large measure" given up on defined benefit plans as the primary private-sector retirement vehicle for corporate employees and will focus its efforts on measures that will strengthen defined contribution plans.
The automation of defined contribution plans, including auto enrollment and automatic deferral increases, was discussed by other speakers at the conference as well.
Lori Lucas, director of participant behavioral research at Hewitt Associates LLC, Lincolnshire, Ill., said that according to Hewitt's 2004 survey of defined contribution plan sponsors, "nearly 50% of (defined contribution) plan sponsors said they wanted to automate in 2005, including automatic enrollment and deferral increases."
J. Mark Iwry, senior fellow in economic studies, The Brookings Institution, Washington, said "automating 401(k) plans is a way to make them more like defined benefit plans."