Automatic enrollment into 401(k) plans is having the greatest impact on younger, lower-income workers, Fidelity Investments reported Tuesday.

Among the plans Fidelity manages, 52% of the participants who were automatically enrolled are between the ages of 20 and 34, and only 13% were between the ages of 50 and 64. Thus, Fidelity said, the impact of auto enrollment on older participants is not as significant, as many are either already participating or elect to enroll on their own.

In addition, 56% of those automatically enrolled made less than $40,000, and only 10% made between $80,000 and $150,000 a year.

Although only 16% of the plan Fidelity manages has automatic enrollment, because it is very common among the largest companies, nearly half of all of the participants in the plans that Fidelity oversees is in a plan with automatic enrollment.

“Auto enrollment is doing exactly what it was intended to do,” said Scott B. David, president of workplace investing at Fidelity. “It is driving many Americans who would have otherwise not saved—mostly the young and lower-paid employees—to begin saving early and consistently, which is critical to having a healthy income in retirement.

“There is no doubt that auto enrollment has helped many new hires, especially younger workers, get started on their way to saving,” David added.


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