Auto-enrollment blues
Recent reports find that while automatic enrollment is on the rise, firms that auto-enroll have lower match and default deferral rates.
Plan Sponsor Council of America
The latest PSCA data show auto enrollment has increased since the mid-2000s, a trend that is generally positive for retirement savings.
Urban Institute, "Automatic Enrollment, Employee Compensation, and Retirement Security"
Not surprisingly, participation rates are higher in plans with auto enrollment, the Urban Institute found. However, employers that automatically enroll participants have an average maximum match rate of 3.2% of earnings, compared with 3.5% for employers not offering auto enrollment. Additionally, the average default rate of 1.8% was well below the average maximum match rate, which might hinder savings in the long run since participants tend to stay with default options.
Urban Institute, "Automatic Enrollment, Employee Compensation, and Retirement Security"
Not surprisingly, participation rates are higher in plans with auto enrollment, the Urban Institute found. However, employers that automatically enroll participants have an average maximum match rate of 3.2% of earnings, compared with 3.5% for employers not offering auto enrollment. Additionally, the average default rate of 1.8% was well below the average maximum match rate, which might hinder savings in the long run since participants tend to stay with default options.
