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Automatic Solutions, Calculators Lifting Savings Rates

Ascensus finds that a number of best-practices for optimizing retirement savings are becoming more popular among clients on its recordkeeping platform.

Ascensus reported a three percentage point increase in 2014 in the number of plans adopting employer matches, from 52% to 55%. The number of plans offering auto enrollment also increased by a small amount, from 15% of plans to 18% (smaller plans have been slower to embrace automatic enrollment).

According to Ascensus’ report, plans with automatic enrollment have participation rates 14 percentage points higher than those without it. In addition, plans that adopt both automatic enrollment and automatic contribution increases reported participation rates that were 23 percentage points higher than those without auto-enrollment.

Additionally, “guided” solutions are increasingly popular, with model portfolios and target date funds now comprising over a quarter of all plan assets. The report cites data from Morningstar that 80% of participants automatically-enrolled in managed accounts remained in that investment two years later. Ascensus also reported that, among participants who switched to managed accounts, 86% of participants had accounts that were deemed to be properly diversified based on their age and risk tolerance. Prior to the switch, just 26% of those accounts were properly diversified.

Plan participants on the Ascensus platform are also increasingly asking for technological integration of their plans, and plan sponsors are largely obliging, with 85% of new Ascensus enrollees joining online. In addition, retirement savings calculators are having success getting participants to save more, with nearly 18% of calculator users reporting increased savings rates. More than a third (37%) of employees who were not saving in their plan started contributing after using the calculator, according to the report.

To read more about Ascensus’ findings, click here.

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