Retirement Made Simpler Comments on AARP Survey about Employer Views on Enrolling Employees in Auto 401(k) Plans

Coalition Stresses Education and Information to Overcome Barriers to Adoption

WASHINGTON, July 7  /PRNewswire-USNewswire/ -- Retirement Made Simpler (RMS) today pointed to the results of coalition partner AARP's survey of more than 800 large companies as evidence that automatic 401(k) features are gaining recognition and acceptance.  The survey, which was partially funded by RMS, also underscores that additional education and information are needed to help companies overcome barriers to adopting automatic enrollment, particularly automatic enrollment of all employees.  

The AARP study, which is posted on the RMS home page, found that the vast majority (94 percent) of employers surveyed report that they are either "very familiar" or "somewhat familiar" with automatic enrollment in 401(k) plans.  While familiarity with automatic escalation is lower than familiarity with automatic enrollment, a majority (78 percent) of employers also report that they are familiar with automatic escalation.  The study also found strong adoption rates. Some 42 percent of respondents report that their 401(k) plan includes automatic enrollment, a number that has been increasing steadily over the past decade.  Fewer (28 percent) report that their 401(k) plans have an automatic escalation feature.  Here are RMS' statements on the study:

David C. John, Deputy Director of the Retirement Security Project and a founding member of the Retirement Made Simpler coalition.

"As the AARP study shows, adoption of automatic features such as automatic enrollment and automatic escalation remains strong, especially since the passage of the Pension Protection Act.  Still, there are misconceptions and a need for further education that is keeping some companies from adopting features that truly optimize their 401(k), such as enrolling all employees and automatically increasing employee contributions each year.  Companies say they're worried about employee backlash, but an increasing body of research suggests this concern is misplaced; a study last year by Retirement Made Simpler found that nearly nine out of ten employees who participate in automatic enrollment or automatic escalation expressed positive views about these benefits."

John Gannon, Senior Vice President of FINRA, another founding partner of the Retirement Made Simpler coalition

"I would encourage companies that have concerns about adding new or enhanced automatic features to talk with other companies that have done so, especially if they want to hear about employee reaction after the fact.  There are a number of success stories on the Retirement Made Simpler website that offer first-hand accounts of companies that have adopted automatic features.   The experience by the company and its employees tends to be overwhelmingly positive."

Retirement Made Simpler is a coalition formed by AARP, the Financial Industry Regulatory Authority (FINRA), and the Retirement Security Project (RSP). The coalition was created specifically to inspire and support employers who want to help their employees save more for retirement. By providing companies with the tools and information they need to automate their 401(k) plans, more Americans will achieve a safe and secure retirement. For more information, visit www.RetirementMadeSimpler.org.

SOURCE Retirement Made Simpler (RMS)