30 Jan Workers Strongly Support Automatic 401(k) Enrollment
While most workers strongly support automatic 401(k) enrollment there are concerns that some employees resent automatic enrollment in 401(k) plans. This appears to have stopped some retirement plan sponsors from adopting automated features, even though most employees actually favor the programs, according to a study recently released by Retirement Made Simpler (RMS), a coalition formed by AARP and the Financial Industry Regulatory Authority (FINRA) to promote retirement saving.
Researchers surveyed a nationally representative sample of 10,130 U.S. adults. Of these respondents, 696 had been automatically enrolled in an employer-sponsored 401(k) plan, while 48 had opted out of a workplace plan after being automatically enrolled
The survey found that 98% of respondents currently enrolled in an automatic 401(k) plan are generally pleased that their employers offer these plans, with 79% of this group saying they strongly favor automatic enrollment. In addition, 95% of the respondents who are participants in automatic 401(k) plans agreed that automatic enrollment has made saving for retirement easy, and 85% of this sample agreed that this feature has helped them start saving for retirement earlier than they had planned.
Commenting on the survey’s findings, FINRA chief executive officer Mary Schapiro said, “Many employers have been concerned that employees would not like automatic 401(k)s—hence they reported being reluctant to adopt them. But these results overwhelmingly dispel that myth, making automatic 401(k) adoption a win-win for employers and employees.”
The study also cited the example of the U.S. Chamber of Commerce, which recently added automatic enrollment to its 401(k) plan in an effort to boost participation. Explaining why the organization moved to an automatic plan, Shannon DiBari, senior vice president of human resources, U.S. Chamber of Commerce, said, “Our goal in implementing automatic 401(k) enrollment was to help our employees save more and save smarter. We recognize that, particularly with our younger employees, saving for retirement is not a high priority or focus. An automatic 401(k) helps them do the right thing and it is hassle-free. It also is an easy process for employers to set up.”
Schapiro added that the RMS coalition hopes that these positive employee experiences with automatic 401(k)s will be the catalyst employers need to implement these plans in their own organizations. “We know that automatic 401(k)s are a simple and effective way to build retirement savings, and we now know employees like them and want them, too,” Schapiro said.