The Bush Administration has proposed making it easier for companies to automatically enroll employees in 401(k) plans by relieving them of liabilities should a worker experience investment losses in the default choices, the Associated Press reports.
Nonetheless, companies will be required to offer prudent investment choices and continue to monitor their performance.
“Too many workers, some overwhelmed by investment choices or paperwork, are leaving retirement money on the table by not signing up for their employers’ defined contribution plan,” said Department of Labor Secretary Elaine Chao.
The Labor Department estimates one-third of employees don’t participate in 401(k) plans and that only 18% of employers now automatically enroll workers in such plans.
Under the provisions of the pension reform law that the president signed into law in August, the Department of Labot must adopt rules on automatic enrollment by February 2007.