Defined contribution plans are increasing their embrace of automatic features, a report by Willis Towers Watson noted on Monday.
Seventy-three percent of DC plan executives offered auto enrollment last year vs. 68% in 2014, the last time the firm conducted its survey. Sixty percent offered auto escalation last year, up from 54% in 2014.
The survey report also noted that cost was the biggest impediment to plans offering auto features. Although the survey didn't seek detail, Kerry Bandow, the firm's western region investment leader, suggested that coordinating auto enrollment with company matches could be a primary reason why DC plans worry about the cost.
Willis Towers Watson recommends that plans set their auto-enrollment deferral rates at or above the corporate match, said Mr. Bandow in an interview.
The report showed that 49% of plans have auto-enrollment deferral rates below the corporate match; 39% have rates at the corporate match level; and 12% have deferral rates above the match.
The report also noted that more plans are offering Roth 401(k) options — 70% last year vs. 54% in 2014.
Mr. Bandow suggested that the Roth option is one way plans seek to compete with their peers, especially in trying to attract younger workers. "It's another retirement readiness card that can be played," he said.
Also, 42% of plans said they reduced the number of investment options over the past three years, with another 41% planning to by 2020.
The survey covered 349 plans, of which 91% were 401(k) plans and 9% were 403(b) plans. The survey included clients and non-clients.
Among the respondents, 44% had DC assets of $1 billion or more; 42% had assets between $200 million and $1 billion; and 14% had assets below $200 million.