The use of auto-escalation by DC plan participants rose 24% in 2016 and 172% since 2012, Bank of America Merrill Lynch's most recent 401(k) Wellness Scorecard found.
In 2015, the use of auto-escalation by employees rose 23%.
Released Wednesday, the scorecard examines trends in BofA ML-administered 401(k) plans, representing $181 billion in total assets and 3.1 million participants with positive balances as of Dec. 31.
Nearly half (49%) of BofA ML-administered 401(k) plans now use auto-enrollment, up from 47% in 2015, and 87% combine auto-enrollment with auto-escalation, up from 85% in 2015.
Additionally, more than 97% of employees who are auto-enrolled did not opt out in 2016, a record, said Gary DiMaio, defined contribution product manager, at Bank of America Merill Lynch, in a telephone interview.
Assets in Bank of America Merrill Lynch-administered 401(k) plans grew 17% in 2016, and employee and employer contributions rose 20% .
While the previous year's scorecard also showed double-digit growth, assets were up only 16% in 2015, and employee and employer contributions were up a total of 14%.
In terms of who is contributing, BofA ML found 82% of millennials contributed to their 401(k) in 2016 vs. 77% of Generation X and 75% of Baby Boomers. This question wasn't addressed in the 2015 survey.
Other findings from the scorecard include:
- Higher automatic default rates corresponded to higher levels of employee participation;
- Among the 57% of BofA ML-administered 401k plans that offered a Roth 401(k) option in 2016, the number of employees contributing to Roth 401(k) accounts increased 31%, compared to an increase of 38% in 2015, and contributions rose by 25%, compared to an increase of 32% in 2015;
- More than 56% of Roth 401(k) contributions in 2016 came from employees 40 years old or younger;
- Roth contributions and pre-tax contributions are increasing in tandem. For the 57% of BofA ML-administered plans with a Roth 401(k) option, employee's pre-tax contributions rose by 16%; and
- The number of employees contributing to health savings accounts rose 21% in 2016, and HSA balances grew 36%. HSA account balances grew 42% in 2015.