A strong endorsement of automatic enrollment in the Pension Protection Act is expected to prompt 401(k) plan executives to adopt the feature.
Automatic enrollment is expected to boost the participation rate in 401(k) plans to more than 90%, from about 70% now, according to the Employee Benefit Research Institute, Washington.
Executives at McKesson Corp., URS Corp., Apple Computer Inc. and Crossmark Inc. are keenly eyeing the option.
The new law, signed by President George W. Bush last week, allows defined contribution plan employers to offer automatic enrollment. Plans also will be permitted to hire their DC providers to offer face-to-face investment advice to help employees manage their 401(k) investments.
Jacalyn Louie, manager of McKesson's $1.5 billion 401(k) plan, said the San Francisco-based company had been considering offering automatic enrollment for the past year, and the new law will help advance that consideration.
"The act does help. It cleared up a lot of the legal issues (like garnishment of wages) we were concerned about," said Ms. Louie. McKesson executives are now strongly considering adding the feature, she said.
Jeff Belfiore, retirement manager for San Francisco-based URS, said he would like the $1.2 billion 401(k) plan to offer automatic enrollment next year. "We've discussed adding it and now the new rules will take away some of the stumbling blocks that have held us back. We're much more likely to implement it now," he said.
Gary Wipfler, vice president and treasurer of Apple Computer in Cupertino, Calif., said officials at the $600 million 401(k) plan are considering automatic enrollment.
Rodger Fisher, vice president of human resources for Crossmark Inc., Plano, Texas, said the new pension law is a positive step in getting more employers to offer automatic enrollment to 401(k) plan participants. Crossmark's $100 million 401(k) plan does not offer automatic enrollment, but officials will strongly consider it now.