Thursday, January 3, 2008
Jerry Kalish of the Retirement Plan Blog, following up on some of my prognostications for 2008, points out another development that will almost definitely be part of the pension and benefit world this year: 401(k) automatic enrollments:
[L]et me add one more trend for 2008 that I consider an easy prediction to make: more employers adding auto-enrollment for 401(k) plans. The impetus for which is, of course, coming from the Pension Protection Act of 2006. Here are some of the early returns:
- Schwab reports that more than 20% of its Retirement Plan Services clients now automatically enroll employees into a 401(k) plan (a four-fold increase from two years ago).
- New York Life found that 32% of its 401(k) plan clients had adopted automatic enrollment as of September 30, 2007, up from 18% on January 1, 2007.
- A recent Spectrum Group survey suggests that within two years, automatic enrollment will be in place at more than 80% of plans with $10 million or more in assets.
And how do employees feel about auto-enrollment? Very positively based on a recent survey by Retirement Made Simpler, a Washington, D.C.-based coalition that provides resources that help employers simplify the auto-enrollment process.
All this enrollment in 401(k)s is good for the retirement savings environment in the States, but will participants still be willing to be put enough away now, so they will have enough for retirement?