May 25, 2012 (PLANSPONSOR.com) - Increasing 401(k) plan participation rates
is high on many plan sponsors’ priority lists, but what are the most effective
For Leviton, a privately held manufacturer of electrical wiring
equipment, the answer is holistic education, as well as auto and advice
features. The company, which has 2,400 U.S. employees, boasts an 84%
participation rate in its 401(k) plan.
Fran Ruderman, Leviton’s vice president of human resources, told PLANSPONSOR the company uses automatic enrollment, automatic increase and
Advice Access—a tool from Bank of America Merrill Lynch that offers saving and
investment advice based on an individual’s personal situation and life stage.
Leviton adopted auto enrollment in 2007, Advice Access in 2009 and
began auto increase at the beginning of this year. The company’s 401(k) match starts at 3% with
an automatic increase of 1% per year.
“The fact that auto enrollment and
auto increase was available was great,” Ruderman said. “We’re a big proponent
[of] employee education, information and accountability.”
According to Bank of America Merrill
Lynch’s 401(k) Contribution Activities Scorecard, plan sponsors using auto
enrollment, auto increase and Advice Access 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
Kevin Crain, head of institutional
retirement and benefit services for Bank of America Merrill Lynch, said he
foresees an increase in plan sponsors implementing auto and advice tools
together—generally with auto enrollment first, followed by auto increase and
advice tools. “So I think that’s kind of the order we normally see … and then
you’ve really got a complete picture,” he said.