Auto enrollment and auto escalation have proved to be valuable tools in helping people save for retirement, and policymakers should broaden their uses, Duckett said.
"We know that we still have a $4 trillion savings gap, so we need existing participants to be able" to utilize auto enrollment and auto escalation "to ensure that they are enrolling and that they are contributing each year," Duckett said.
Congress in December passed a retirement security package, known as SECURE 2.0, that included an auto-enrollment and auto-escalation provision. Starting in 2025, all new 401(k) and 403(b) plans will be required to automatically enroll new employees in their plan, unless they opt out, at an initial amount of between 3% and 10%. The amount will then increase by 1 percentage point annually until it reaches between 10% and 15%. Existing plans will not be impacted, and there are exceptions for new and small businesses, as well as governmental and church defined contribution plans.
Duckett said that requirement should be expanded to existing plans as well.
An idea from Richard Neal, D-Mass., ranking member on the House Ways and Means Committee, would go further. Neal has floated legislation to require employers that don't offer retirement plans to automatically enroll their employees in individual retirement accounts or 401(k)-type plans.
While the bill was formally introduced in 2017, a version of it was advanced out of committee in 2021 along party lines when Democrats were formulating the bill that would become the Inflation Reduction Act. Neal's auto-enrollment measure didn't make it into the final package and hasn't been reintroduced in the current congressional session.