Plan sponsors and their advisors can conduct automatic enrollment
, auto-escalation, and stretch-match formulasin real time with real client datato identify the most beneficial retirement solutions for their business and employees.
Often, these rules have an automatic enrollment
Among its provisions, the PPA enabled the automatic enrollment
of workers into 401(k) plans at a default savings contribution rate, as well as the auto escalation of workers' contribution rates on a periodic basis.
Vanguard adds that in late 2015, more than 33% of participants joined their plans under automatic enrollment
2 percent of 403(b) plans use automatic enrollment
, up slightly from last year's 16 percent.
Just 40% of sponsors responding to the 2014 PLANSPONSOR Defined Contribution (DC) Survey use automatic enrollment
, and 90.
Some research suggests that the popularity of the automatic enrollment
provision increased after the passage of the Pension Protection Act (PPA) of 2006, which removed many of the legal barriers to automatically enrolling eligible employees into DC plans.
While McHugh does not think defined contribution (DC) plan sponsors are as tentative now as they once were about auto-deferral increases offered as an "opt-in" feature for participants, they are more timid about marrying automatic enrollment
with an automatic escalation provision.
is an effective tool for increasing participation in DC plans because it overcomes individual inertia.
Target-date funds are often designated as the investment default in automatic enrollment
plans, but in plans with voluntary enrollment, 48% of participants invest in TDFs.
Vanguard researchers attributed the study's findings to the growing use of automatic enrollment
programmes and the widespread shift from conservative default investments toward balanced options, such as target-date funds (TDFs), in many plans.
With a slight change from the original proposals, an employer will be able to delay enrolling a new employee for up to three months before the automatic enrollment