The Wellness Scorecard is a quarterly report (with data as of March 31, 2013), which reveals quarter-over-quarter and year-over-year trends in retirement plan participant behaviors, along with employers’ adoption of health savings tools and 401(k) plan design features.
Results of the Scorecard show that 401(k) plan features are having a positive impact. Tools such as automatic enrollment, automatic increase, and age-based default investments and guidance are enhancing employees’ financial wellness.
Between January 1 and March 31, more than 26,000 employees were automatically enrolled in Bank of America Merrill Lynch 401(k) plans, with only 7% opting out. This represents a 93% success rate in getting employees to engage with their plan, and is “further evidence that greater use of automatic enrollment has the potential to considerably increase 401(k) participation,” according to the findings.Adoption of an automatic increase plan feature grew substantially during the first quarter, possibly indicating a growing comfort level by employers to help employees increase their savings rates. During this three-month period, there was a 9.5% growth in the number of plans using this feature (from 189 to 207), and 9.3% growth in the number of employees using it.
The Scorecard also showed that employers and employees are taking action on healthcare savings. Workers planning for healthcare costs are increasingly applying the kind of experience and resources they use to plan for retirement, boosting demand for vehicles such as health savings accounts (HSAs). For example:
- Total assets in Bank of America HSAs grew by 48% between January 2012 and January 2013; and
- Year over year, average HSA balances have also continued to grow – from $1,741 in 2011, to $2,029 in 2012, and now $2,093 in 2013.
Additionally, the Scorecard results showed that a company’s 401(k) and other retirement plans can be effective tools for retaining employees. Data based on 2.1 million employees eligible to participate found that those who don’t participate in their company’s 401(k) have turnover rates double those that do participate (30% vs. 15%). The impact was fairly consistent across most age groups and industries, though among employees under the age of 35 the totals are slightly higher at 25% compared with 40% respectively.More information about the latest Wellness Scorecard is available here.