More than 300 defined contribution plans administered by Vanguard used automatic enrollment in 2007, three times as many as in 2005, according to a Vanguard report.
The plans with auto enrollment, typically sponsored by larger companies, now account for 15% of all Vanguard-administered plans and one-third of all participants in Vanguard-client plans, according to a news release about the report, How America Saves 2008. Also, among the plans with automatic enrollment, two-thirds now feature automatic annual increases in savings rates, up from one-third in 2005.
Vanguard attributes much of this change to the tax and fiduciary incentives for automatic enrollment included in the Pension Protection Act of 2006, and expects continued rapid adoption of automatic savings and investment solutions at both the plan and participant level, according to the news release.
Separately, 75% of employees participated in 401(k) plans in which Vanguard is administrator, with an average contribution rate of 7.3%, the news release said. Both figures are unchanged since 2000.
The report is based on analysis of 3 million DC participants in more than 2,200 plans offered administered by Vanguard.