For defined contribution plans to work, large U.S. retirement plan sponsors believe they should be mandatory, and include auto enrollment, savings escalation and employer contributions, according to a study released on Monday by Northern Trust.

The research study, The Path Forward: Designing the Ideal Defined Contribution Plan, surveyed 50 large U.S. defined contribution (DC) plan sponsors, which represent more than 970,000 participants and over $100 billion in plan assets, and five leading investment consultants. The interviews were conducted by Greenwich Associates in July and August 2010.

The survey found that 63% of plan sponsors and four out of five consultants think participation in DC plans should not be optional. Forty-nine of the 50 plan sponsors and all of the investment consultants believe automatic enrollment should be a key feature of DC plan construction. Currently Federal stats should only 19% of private industry workers are enrolled in plans with automatic enrollment, according to the press release. Seventy-five percent of plan sponsors and all consultants support automatic escalation, which would build on the default level of between 3 and 7 percent for employee salary contributions to auto-enrollment plans. Almost all plan sponsors and consultants report that the ideal DC plan structure would include significant contributions from employers, while 60% of plan sponsors believe employer contributions should vest immediately, instead of waiting until an employee works for one year or more at the company.

The majority of those surveyed also said they were in favor of government and employer policies, including tax incentives, restrictions on taking loans against plan balances and transparent fee structures, to strengthen plans.

“The study participants describe the ideal DC plan as simple, automatic and cost effective,” said Jim Danaher, senior investment product manager for Defined Contribution Solutions at Northern Trust Global Investments. “These traits are necessary to satisfy the requirements of three different constituencies: employees who need an efficient means of accumulating assets for retirement; employers in need of a cost-effective benefit to attract and retain valuable employees; and policymakers in need of a reliable savings vehicle in an age of lengthening life spans, pension funding crises, and chronic under-saving.”