The majority of defined contribution plan sponsors are using auto enrollment, with virtually all of them providing a company match, according to a survey from Northern Trust Asset Management.
Results of NTAM's annual survey show that in 2020, 68% of its 50 largest DC clients offer auto enrollment, down 2 percentage points from 70% in 2019 but up from 60% in 2018. Almost all of them (98%) offer a company match, with most offering a match of 4% to 6%.
Factor-based strategies are offered by 28% of sponsors, the same as last year, which was the first year the survey included them. Half of the plans surveyed are offering factor-based strategies as a core option.
The results of the survey also show that 76% of DC plans use single- and multimanager white label options to create broader investment options as a means of mitigating volatility. Single and multiwhite labeled funds grew to 76% in 2020 from 72% in 2019.
NTAM has seen a considerable decline in DC plans using single, white label options, with only 22% of plans using them in 2020, down from 26% in 2019.
Target date funds are gaining in popularity among plans, with 92% offering them in 2020, up from 88% in 2019. Within this category, 65% offer off-the-shelf options, while 35% offer custom solutions.
As for the type of investment vehicles being offered, collective funds have become the dominant choice among plans, with 53% offering them, vs. 33% using separate accounts and 11% using mutual funds.
The average number of investment options offered has remained steady over the past few years, standing at 13 in 2020, up one from 2019 and same as in 2018.