Automatic enrollment accounts are gaining in popularity and may soon become the norm for defined contribution(DC)plans, according to a recent survey by the Employee Benefit Research Institute(EBRI)and Mercer Human Resource Consulting.
The survey found that 66% of organizations have already adopted auto enrollment or are currently adding this feature.
The adoption rate is lowest among nonprofit organizations(32%)and highest among the financial/banking industry(88%). In addition, 48% have either already auto escalation—whereby participant deferral rates are automatically escalated until they reach a certain level—or are considering adding this feature.
“As organizations come to depend more on DC plans to deliver retirement benefits, automated approaches to saving for retirement are gaining ground,” says Dallas Salisbury, president and CEO of EBRI. “Based on the trends we are seeing, we think automatic enrollment may soon become standard practice among DC plans.”
The survey, which covered 163 respondents, was limited to organizations that sponsor defined benefit plans in addition to DC plans.
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