According to recently released research by professors Benartzi and Thaler, 56% of plans now offer auto enrollment (up from 19% in 2005) and 51% offer auto escalation (up from 9% over the same period). Clearly, more plans are taking advantage of auto enrollment and auto escalation. But do plans with these features offer a lower match? Reuters columnist Mark Miller ponders this question here.
New research efforts by the Urban Institute and the Center for Retirement Research at Boston College contend that the answer is yes. Using data from the Bureau of Labor Statistics covering 14,000 companies, the match for plans using auto enroll was 3.2%, compared with 3.5% for those using voluntary enrollment.
Those stats are contrary to a 2010 report by EBRI and Aon which showed that auto enrolled plans actually boosted their match. However, the discrepancy may be based more on plan size than auto enrollment.
While both Vanguard and Fidelity disputed the Urban Institute’s finding, data from Fidelity showed that small plans (100-250 participants) had lower matches for plans that used auto enrollment, but very large companies (25,000-50,000) showed opposite results. This mirrored the Urban Institute’s findings, with the match for plans with fewer than 500 workers at 2.8%, compared with 4.1% for plans with 1,000-2,500 employees.
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