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Boost retirement plan participation with automatic enrollment, contribution increases

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in Compensation and Benefits,Human Resources

Employees who were automatically enrolled in a defined contribution retirement plan—401(k)s and 403(b)s, for example—and who participate in automatic contribution increase programs have a 25% higher contribution rate than other employees. That’s what the Mercer consulting firm found when it studied investing behavior among participants in retirement plans it administers.

Among employees automatically enrolled in retirement plans, those who also agreed to automatic increases contributed 4.4% of salary, compared to 3.5% for auto-enrollees who opted out of automatic contribution increases.

However, the highest contribution rates—8.5%—were found among employees who neither auto-enrolled nor participated in auto-increase programs. But Mercer cautions that those are rare, super-motivated retirement investors.

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