A new report refutes the notion that automatic enrollment features cause employees to disengage from the retirement planning process.
After eight years of offering automatic enrollment to its clients, Bank of America Merrill Lynch notes that:
• Of employees who were placed into their employer’s plan via automatic enrollment, only 3.4% opted out in 2014.
• Fewer employees opt out of participating in their 401(k) plan when the default contribution rate is higher. In fact, as default rates rise, participation in the plan increases as well.
• More participants in automatically enrolled plans voluntarily increased their contribution rate year-over-year.
• Average contributions increase dramatically for participants who are automatically enrolled. Every year since 2009, contributions for automatically enrolled participants have increased, according to the report.
