Nearly three in five plan sponsors automatically enroll at least some of their workers in their 401(k) plans, according to a new survey of large employers by Towers Watson.
A news release describing the study’s main findings said 57% of 334 companies surveyed use auto enrollment — 39% automatically enroll new employees and 18% automatically enroll all employees.
“The Pension Protection Act of 2006 made it easier for employers to take advantage of new methods for getting workers to save for retirement,” Alec Dike, senior retirement consultant at Towers Watson, said in the news release. “Many employers have adopted the automatic enrollment and escalation of contribution provisions as they seek to help employees save for their retirement.”
Target-date funds are the most popular default investment option, with 72% of sponsors using them as a default option, according to the survey. Also, 78% of companies using target-date funds as their default option have selected funds not affiliated with their record keeper.
Since September 2008, 18% have reduced or suspended matching contributions to 401(k) plans. Among those, 49% haven’t restored the match. “Virtually all indicated they are considering reinstating all or a portion within the next 12 months,” the news release said.
Ed Emerman, a spokesman for Towers Watson, said full survey results will be published in mid-July. The survey was conducted in April and May at companies with more than 1,000 employees that in aggregate have more than 5.3 million plan participants. Although some Towers Watson clients were surveyed, Mr. Emerman said the survey included other plan sponsors.
