The automatic options that Charles Schwab offers to plan sponsors and participants in its 401(k) platform are growing increasingly popular, the company said.
In fact, Schwab's platform really does automate much of the entire process -- from automatically enrolling participants, deciding their contribution levels for them, synchronizing increases in contribution levels in step with raises and defaulting their investments into target-date funds, which offer ongoing rebalancing.
"Too often, employees don't take action because they are confused, overwhelmed or uncertain about making retirement plan decisions," said Steve Patterson, vice president of Schwab's corporate and retirement services unit. "By automating the enrollment, savings and investment decisions, plan sponsors can help employees save more for retirement."
A recent survey of workers by the Employee Benefit Research Institute found that 69% of those who are currently not enrolled in a 401(k) or defined contribution plan said they would likely remain in such a plan if there were automatically put into it.
One of Schwab's 401(k) clients, Oregon Steel Mills, found that after switching to Schwab's automated platform, participation rates rose from 50% to 80%. The company is now also going to automatically set minimum contribution levels at 4%, which is Oregon Steel Mills' match level.