If you’re not at least considering auto-enroll into your company’s retirement plan, you’re in the minority.
In a trend that is likely to continue, 47% of U.S. companies are automatically enrolling workers into 401(k)s and similar plans, according to an April survey by business consultant Watson Wyatt. And of those who don’t auto-enroll, one-third said they’re considering it.
The survey covered companies employing a total of about 2 million workers.
The survey also found that the number of companies that use target-date or lifecycle funds as their default investment option has increased sharply in the last few years.
More data from the survey:
- 96% have a default investment option. The number of companies using lifecycle or target-date funds as their default investment option has increased from 38% in 2006 to 62% today.
- 10% still offer stable value and money market funds as their default, despite Department of Labor (DOL) regulations issued in 2007 that stated that these options would not be given fiduciary protection.
- Plan sponsors that auto-enroll their employees use a median initial contribution rate of 3%, with a range from 1% to 7%.
- 51% of the plan sponsors that auto-enroll also automatically increase the contribution rate by a certain amount each year for their participants. The final contribution rate is between 3% and 20%, with a median rate of 6%.
- The typical range of fund options is 10 to 14; 11% of employers offer 25 or more.
- 38% of employers offer company stock as an investment option.
- 57% have an average investment fund expense between 0.5% and 0.84%. Larger plans tend to pay lower investment fund fees compared with smaller plans.