Some 77% of state and local government employees said they would stay in defined contribution plans, known as supplemental retirement plans, if they were automatically enrolled, according to a survey released Thursday by the Center for State and Local Government Excellence, ICMA-RC and Greenwald & Associates.
Moreover, nearly half (47%) approved of auto enrollment in an SRP, while 44% approved of employers setting an employee default rate. But strong approval of auto enrollment declined to 12% from 24% when the default is set at 7% rather than 1%, the survey, Nudging Deferral Rates Within Public Sector Supplemental Retirement Plans, showed.
The survey assessed public employee perceptions of auto enrollment into SRPs and the impact of varying default deferral rates on an employee's likelihood to stay in the plan, according to a news release. It also examined the attitudes and behaviors of public sector employees regarding retirement savings, their progress toward financial security, and issues driving their plan participation.
Of the people who approve of auto enrollment, 24% said it encourages retirement saving, 14% said people do not prepare enough for retirement, 13% said that people would not enroll on their own and 13% said that it is done with the best interests of the employee in mind.
Auto escalation garnered more pushback from respondents, with 38% not approving and 30% in favor.
Also of note, 79% said they are satisfied with their retirement plan, but 57% said they want more information/education about general financial issues and 58% want the same about retirement planning/savings, the survey showed.
"The findings are critically important given that the responsibility of saving for retirement in the public sector is shifting from the employer to the employee in many jurisdictions," said Rivka Liss-Levinson, SLGE director of research and report author, in the news release. The survey findings "suggests that employers, retirement plan providers and policymakers should consider how small nudges — such as changing the default rate for auto-enrollment in an SRP — can combat inertia and impact an employees' ability to save for retirement," she added.