Auto features increase DC enrollment and contributions

Defined-contribution sponsors that have implemented automatic enrollment have consistently had higher participation rates, the latest survey from Fidelity Investments shows.

At the end of 2020, more than 87% of eligible employees whose employers offered automatic enrollment participated in their DC plan, compared with about 82% a decade ago, the survey, released Aug. 19, showed. However, plans without automatic enrollment have participation rates hovering around 50%. Last year, it was 52%, down from about 55% in 2010.

Additionally, Fidelity said that automatic increases have led to higher savings rates. The combined employee and employer savings rate has steadily increased over the years, standing at 13.9% in Q2 2021 vs. about 12% in mid-2011.

Only about 7% of 401(k) participants during Q2 2021 lowered their savings rate, compared with almost 10% a year ago.