The vast majority of U.S. employees surveyed are happy with being automatically enrolled in their companies’ 401(k) plan, according to a new study of employer-sponsored retirement plans.
According to the study, commissioned by the Retirement Made Simpler coalition, 98% of employees are glad their employers offer automatic enrollment in the company 401(k) plan, and 79% say they are very happy with the plan. Only 7% of employees opted out of the plan.
“Many employers have been concerned that employees would not like automatic 401(k)s - hence they reported being reluctant to adopt them,” said Mary Schapiro, FINRA chief executive officer. “But these results overwhelmingly dispel that myth, making automatic 401(k) adoption a win-win for employers and employees.”
In addition to making it easier to save for retirement, automatically enrolling employees in 401(k)s can help more people save more over time, especially if they increase the percentage of their pay they contribute.
According to the Retirement Security Project, many companies that use automatic 401(k) plans see employee participation soar to between 85 and 95 percent. Traditional plans typically see much lower results because employees have to actively choose their plan, and may be intimidated by all the choices and complicated language.
“Our goal in implementing automatic 401(k) enrollment was to help our employees save more and save smarter,” said Shannon DiBari, senior vice president of human resources for the U.S. Chamber of Commerce. “We recognize that, particularly with our younger employees, saving for retirement is not a high priority or focus. An automatic 401(k) helps them do the right thing and it is hassle-free. It also is an easy process for employers to set up.”
“The Retirement Made Simpler coalition hopes that these positive employee experiences with automatic 401(k)s will be the catalyst employers need to implement these plans in their own companies,” Schapiro said.