More employers than ever are automatically enrolling employees in defined contribution retirement plans such as 401(k)s, according to a new survey by Alight Solutions, an HR consultancy that recently spun off from Aon Hewitt.
And, with companies better understanding the role inertia plays in savings, they’re enhancing their retirement plans in other ways to encourage greater saving.
Alight’s 2017 survey of 333 large U.S. employers, representing 10 million workers and $775 billion in retirement assets, found that 68% of employers automatically enroll workers in 401(k) plans, up from 58% in 2015.
They’re also nudging savings rates higher by defaulting workers into plans at higher rates. Now, 33% of companies automatically default workers into their plans at a savings rate of 6% of pay or higher.
Employers are also driving higher savings rates by automatically escalating contributions over time. Nearly three quarters (74%) of companies with automatic enrollment also have automatic contribution escalation, up significantly from 28% a decade ago. Hand-in-hand with this change is a trend to set higher escalation thresholds. In 2017, 68% of companies set their escalation threshold at 10% or higher, up from 43% in 2007.