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Employers Adding Automatic Enrollment to DC Plans: Aon Hewitt

Under automatic enrollment, employees who don't respond to participation notices are enrolled automatically in a plan unless they notify their employers that they want to opt out.

January 26, 2012
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More employers intend to add automatic enrollment features to their 401(k) and other defined contribution plans, according to an Aon Hewitt survey.

The survey of more than 500 large employers found that 34% of respondents intend to add an automatic enrollment feature this year.

As of Jan. 1, 2011, 55 percent of employers offered automatic enrollment, up sharply from 24 percent in 2006 when Congress passed legislation that pre-empted any state laws that could have interfered with such programs.

Under automatic enrollment, employees who don't respond to participation notices are enrolled automatically in a plan unless they notify their employers that they want to opt out.

In addition, among employers now offering automatic enrollment, 24 percent intend to modify the feature, such as adding an automatic escalation feature in which contributions automatically increase by a certain percentage each year or boosting the initial contribution amount.

"Automatic enrollment alone isn't enough to get workers where they need to be," Pam Hess, Aon Hewitt's director of research in Lincolnshire Illinois, said in statement.

"Adding features, such as contribution escalation, to get workers saving at least at the employer match level—or ideally even more—is key to helping them meet their savings goals," Hess said.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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