But, how did the standard depth of six feet for graves get set?
The origins of the standard came from a 1665 plague outbreak in England. As the disease swept the country, the mayor of London laid down the law about how to deal with the bodies to avoid further infections. Among his specifications—made in “Orders Conceived and Published by the Lord Major and Aldermen of the City of London, Concerning the Infection of the Plague”—was that “all the graves shall be at least six feet deep.”
However, modern American burial laws vary from state to state, and many states simply require a minimum of 18 inches of soil on top of the casket or burial vault (or two feet of soil if the body is not enclosed in anything).
One year after a re-enrollment, the ‘stick’ rate of investment in the default fund remains high, even when some participants partially opted-out, Vanguard found.
One year after a re-enrollment event, most participants remain invested in the default fund, Vanguard found in a case study.
Early in 2016, Vanguard examined the impact of a re-enrollment event within a large defined contribution (DC) plan, analyzing participant behavior immediately after the event and then six months later. It extended its analysis to study the behavior of the same participant cohort one year after the event.
The original re-enrollment event occurred in two phases, beginning in December 2014 during the transfer of a large DC plan’s recordkeeping services to Vanguard. Because of the presence of a stable value investment fund, which required advance notification to the insurer, the full re-enrollment was not completed until June 2015. After one year, the plan menu remained consistent in terms of the styles and number of funds offered; however, the bond funds and one stable value offering were changed.
Immediately after phase 1, at the end of December 2014, 10% of participants partially or fully opted out of the default fund and elected their own portfolios. After phase 2, this percentage increased slightly. One year later, 20% of participants were no longer solely invested in the default fund. However, Vanguard finds most of the increase is observed among participants who moved part of their portfolio out of the target-date default, and the percentage of participants who fully opt out remains low over the entire one-year period.
Vanguard notes that after the two-phase re-enrollment event, the trajectory of the median equity allocation aligned more closely to the target-date series. The distribution or variation around the glide path, representing individuals who chose to deviate from the single target-date default fund, grew wider as participant age increased. This widening of the distribution reflected later-than-normal retirement ages anticipated by some older investors, Vanguard found.
Six months after the re-enrollment, 94% of participants and 74% of plan assets were in target-date funds (TDF)s. One year later, 92% of participants and 81% of plan assets were in TDFs.
Vanguard concludes, “Over time, investment defaults remain ‘sticky.’ This reinforces our findings that re-enrollment is an effective strategy to improve portfolio diversification.”