May 21, 2012 (PLANSPONSOR.com) - Combining 401(k) plan features including
automatic enrollment, automatic increase and personalized saving/investing
advice can significantly increase employee participation rates.
According to Bank of America Merrill Lynch’s 401(k) Contribution
Activities Scorecard, plan sponsors using auto enrollment, auto increase and
Advice Access—which offers saving and investment advice based on an
individual's personal situation and life stage—had a 76% participation rate on
average in March 2012 and March 2011. Plans that did not use these services
showed a 48% participation rate in March 2011 and a 50% rate the following
Plans that use a combination of auto increase and Advise Access
had a 52% participation rate in March 2011, and a 54% rate in March 2012. Plans
that paired auto enrollment and Advice Access showed a 76% participation rate
in March 2011 and a 77% rate in March 2012.
Other statistics from the quarterly Bank of America Merrill Lynch report included:
- More than 1.4 million participants are actively contributing to
their 401(k) plan.
- More than 297,000 employees took a positive savings action in their
401(k) plan accounts in the first quarter of 2012, compared with approximately
291,000 in the first quarter of 2011.
- Among plan participants who took some type of savings action
during the first quarter of the year, 70% took a positive action (started or
increased contributions), versus 30% who took a negative action (stopped or decreased
contributions—compared with 75% and 25%, respectively, during the first quarter
- 16% of plans use both auto enrollment and Advice Access, up from
12% in 2011.
- 12% of plans use both auto enrollment and auto increase, up from
10% in 2011.
- 9% of plans use auto enrollment, auto increase and Advice Access,
up from 7% in 2011.