Updating recent auto-enrollment research across its retirement clients, New York Life Retirement Plan Services found that over time, plans with auto-enrollment saw steady deferral increases and sustained high participation, versus the opposite in plans without auto-enrollment.
According to a New York Life study examining plans with auto-enrollment versus those without it over four years through Dec. 31, 2011, plans employing this feature achieved 93% participation in the first year of auto-enrollment and 87% after four years. By contrast, plans without auto-enrollment generated a participation rate of 37% in Year 1 and 56% in Year 4. Additionally, in plans with auto-enrollment, the average participant deferral rate was 4.65% in Year 1 and to 6.1% in Year 4. In plans without this auto feature, deferrals started high, at 7.29% in the first year, but declined to 6.77%. Essentially, after four years, auto-enrolled participants' deferral rates caught up to those who self-enrolled.
Research from New York Life earlier this year showed that plans which auto-enroll their participants at higher deferral rates have lower participant opt-out rates and higher participation overall.
