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Auto Enrollment is going up

willis

When automatic enrollment was first introduced, it was introduced as a negative election and I thought it was just a cheap gimmick by an employer to help their actual deferral percentage test because all money from the negative election ended up in some money market or stable value fund because there was no relief for plan sponsors in a participant-directed plans. Once it was codified into the law, I became more supportive because it allows assets to be invested in a QDIA fund.

 

While I’ve grown to love automatic enrollment, so have plan sponsors.  According to a Willis Towers Watson study, 73% of plans now offer automatic enrollment. Even though 47% thinks the enhancement might be too costly.

 

I’ve been an advocate of automatic enrollment because most employees will be too busy to opt out and they’re saving for retirement involuntarily. A good financial advisor can get these automatic enrollees to maybe increasing their deferral percentage and actively invest. I just think it’s a good thing to get people to save for retirement even if you have to draft them.

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