Feature
MISCONCEPTIONS
ABOUT RETIREMENT PLAN AUTO FEATURES
By Stephen Moser, CFP®, Consultant RetireAdvisers® Services
I
f you’re like the majority of plan sponsors, then one
of the more important goals for your plan may be
to increase the rate of employee participation1. The
evidence is clear that automatic enrollment, in which
employees are enrolled in their company plan unless they
opt out, is very effective at increasing participation rates.
In spite of how effective auto features are, many sponsors are
still holding back from adopting them due to misconceptions.
Below are seven common misconceptions plan sponsors
have about retirement plan auto features.
MISCONCEPTION
1
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MISCONCEPTION
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If we make everything automatic,
employees won’t take responsibility
for their own retirement planning.
Most workers want to start saving for
Our employees will resent the retirement, but sometimes need a little help to overcome
perceived loss of control over more their own behavioral inertia. By adding auto features, you’re
of their paycheck.
not taking responsibility away from your employees, you’re
The concern about upsetting your employees
is the most common objection to adding auto features to a
retirement plan. But according to a Harris Poll® conducted
in 2007, 98% of those currently automatically enrolled
agreed with the statement, “You are glad your company
offers automatic enrollment.”2 And in the same poll, 79%
of those who opted out of automatic enrollment still agreed
with the above statement.
MISCONCEPTION
aggressively, so it’s mostly the lower-paid employees who
will be auto-enrolled3. As a result, the match will be based
on percentages of those lower salaries only. Plus, if you start
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