Automatic Features Leading to Greater Retirement Readiness

July 11, 2012 ( – Retirement plan sponsors say automatic features are increasing employees’ retirement readiness, according to a study from Lincoln Financial Group and Retirement Made Simpler.

By Rebecca Moore | July 11, 2012
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The study found 94% of plan sponsors recognize the success of automatic features, including automatic enrollment, automatic escalation and qualified default investment alternatives (QDIAs), in helping them address their plan-related goals and say these features drive higher participation and deferral rates along with better investment performance.   

Eighty-five percent of plan sponsors reported that automatic features are especially effective in helping participants who consider themselves less educated on retirement matters. Ninety-seven percent of plan sponsors who have adopted the bundle of automatic enrollment, automatic escalation and QDIA say the advantages outweigh any perceived disadvantages.   

Plans with automatic escalation experienced deferral rates of 8% or higher compared to the average deferral rates of 4% or less reported by the Plan Sponsor Council of America (PSCA) for the majority of plans.