Now that automatic enrollment has become commonplace in defined contribution (DC) plans, it’s time for employers to take the next logical step.
Nearly 7 out of every 10 DC plan participants want automatic escalation to begin when they hit 45, found a recent study by LIMRA, a financial services provider, which polled 300 U.S. workers.
Twenty-two percent of employees want their contributions to their defined contribution (DC) plans increased automatically by at least 1% every year after they hit 45. And an additional 45% said they’d be happy if their contributions increased automatically by 2% or more annually.
Employees who already make use of automatic features in their DC plans are even more amenable to the idea — as 54% of those workers want their contributions to automatically increase by 2% or more every year.
However, only 21% said their DC plan had automatic escalation in place.
Bottom line: If you’re looking for a way to help employees save more for retirement, adding an automatic escalation option could be one of the easier ways to do it. And a quick poll of employees could tell you whether or not the option would be a popular one.
