Benefits November 30, 2011

Fidelity Analysis Finds Auto Enrollment Increases Plan Participation

November 30, 2011 (PLANSPONSOR.com) – An analysis by Fidelity Investments found more than half (51%) of its 401(k) participants are now in a plan that offers auto enrollment.  
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Fidelity’s analysis looks at the impact of the Pension Protection Act of 2006 (PPA) on 401(k) plan design and participant savings behaviors. The findings show the percentage of plans defaulting participants into age-based lifecycle funds has soared to 73% from just 11%.

Plan Sponsors Increase Adoption of Auto Enrollment, Boosting Participation 

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Since 2006, Fidelity plans that offer auto enrollment have grown to 21%, up from just 2% five years prior. Among the largest plans of more than 50,000 participants, 63% offer the plan design feature. Of Fidelity’s 401(k) participants, more than half (51%) are now in plans offering the feature, and it’s boosting participation.

The average participation rate for eligible employees in plans without auto enrollment is 55%. However, the rate for eligible employees in plans with it jumps to 82%. Auto enrollment is also having an effect on younger, eligible employees age 20 to 24 where the participation rate is 76% in plans with auto enrollment but only 20% in those plans without it.

Roth 401(k)s More Prevalent Over Past Five Years 

The PPA allows plan sponsors to offer Roth 401(k) deferrals in workplace retirement plans. Since 2006 the number of plans offering Roth 401(k)s has grown to 31% from 4%, and today nearly half of all 401(k) participants are in plans that offer the feature. Even though participant usage of Roth 401(k)s remains low, it has doubled to approximately 6%, up from only 3% five years ago. Gen Y investors have adopted Roth 401(k)s enthusiastically, at 9% overall.

Benefits November 30, 2011

Survey Finds Americans Feel Financially Under-Protected

November 30, 2011 (PLANSPONSOR.com) - According to a survey sponsored by New York Life Insurance Company, 53% of U.S. respondents report they are financially under-protected. 

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The survey revealed one in five respondents (19%) believe they are severely under-protected, and only 46% describe their family as being protected when it comes to their finances.

Other findings from the survey include:

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•  Parents are less likely to feel their family is protected than are adults without a child under 18 (36% vs. 51%).

•  Older adults – those 60 and up – are much more likely than adults ages 30-59 to feel that their family if financially protected (63% vs. 39%).

•  A large gap also emerges across income groups; those with a household income of $50,000 or more are more than twice as likely as those with a lower household income to feel that their family is protected financially (61% vs. 27%).

•  Others who are most likely to feel financially protected include college graduates (60%) and retirees (63%).

 

The survey was conducted by Ipsos on behalf of the New York Life Insurance Company on November 10-14, 2011. For the survey, a national sample of 1,011 adults ages 30 and older from Ipsos’ U.S. online panel were interviewed online.

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