Left to their own devices, 401(k) investors either underweight or overweight their risk tolerance, ending up with a portfolio either loaded up or too light on equities.
While employers have been adopting automatic enrollment and increases, along with default target-date funds, in recent years, their employees who already enrolled in their 401(k) plans dont have the benefit of these default choices, The Baltimore Sun reports. And so, many employers are re-enrolling existing workers, with the right to opt out, of course.
Why are employers going to the trouble? They realize the responsibility has shifted to workers to save enough for retirement and invest wisely, said Ann Combs, head of the strategic retirement consulting group at Vanguard. They also feel more comfortable making these decisions due to the provisions of the Pension Protection Act of 2006.
Typically, however, employers re-enroll employees only when they make a substantial change to their plan, such as selecting a new administrator or fund lineup.
But Fidelity is taking a wait-and-see approach to what Vice President of Marketing Michael Doshier calls a very bold move.