More defined contribution plans are using automatic enrollment and auto escalation, according to a Callan Associates survey.
In a survey of 90 DC plans in October, 51.3% used auto enrollment, vs. 43.9% in 2009, according to a news release describing the survey. Plans using auto escalation climbed to 46.2% from 33.8%.
“There were a lot of pleasant surprises after years of sobering findings,” Lori Lucas, defined contribution practice leader at Callan, said in an interview, referring to stock market turmoil and a shaky economy.
The news release said inflation is one of the highest concerns among plan executives. “As a result, real return and TIPS funds were the most commonly added options in 2010 and will likely keep that spot in 2011,” the news release said. Nancy Malinowski, a Callan spokeswoman, said in an e-mailed response to questions that the firm didn’t provide percentages about usage.
Also, fully unbundled plans increased to 34.9% from 29.9% in 2009, according to the release. “The unbundling trend may continue as large plan sponsors seek to reduce participant costs, spread fees more equitably and increase investment flexibility,” the release said.
Callan defines fully unbundled plans as those with a separate record keeper and trustee, and in which none of the investment options is managed by the record keeper.
The news release said 76.2% of companies in the survey have 401(k) plans; the rest of the plans in the survey included 457, profit-sharing, 403(b) and others, such as 401(a) plans, according to Ms. Malinowski. The survey was not restricted to Callan clients, she wrote.