Among 120 large companies, 75.8% of employees were enrolled in their company’s defined contribution plan in 2010, according to an Aon Hewitt report.
It’s the highest level of participation in DC plans since Aon Hewitt began tracking the data in 2002, according to a news release about the report.
Enrollment is up 2.1 percentage points from 2009, largely a result of increased adoption of automatic enrollment into DC plans by the companies.
About 60% of employers offered automatic enrollment in 2010, up from 24% in 2006. Also, 85.3% of employees who were subject to automatic enrollment participated in their company’s DC plan, compared to 67.3% who participated but were not subject to automatic enrollment.
Employees who were automatically enrolled contributed 6.8% to their DC plans, a full percentage point less than those who were not automatically enrolled. Aon Hewitt attributed the gap to low default contribution rates, with 76% of automatic enrollment plans setting default contribution rates at 4% or less.
“Saving even just 1% less over a career has a dramatic impact on (retirement) accumulation,” Pamela Hess, director of retirement research at Aon Hewitt, said in the news release. “Ultimately, it can lead to nearly a 15% loss in retirement income.”
The report notes that 29.4% of plan participants contributed below the company match, up from 28.2% in 2009.
Ms. Hess could not immediately be reached for comment.