Fidelity: Life Cycle Funds, Automatic Plan Programs Gaining Popularity

January 13, 2005 ( - Among employers with retirement plans at Fidelity Investments, increasing numbers of plan sponsors are opting for life cycle funds, annual increase and automatic enrollment programs, and discretionary investment management services.

A Fidelity news release said that its analysis of the 12,806 employer-sponsored retirement plans it administers, representing nearly 11 million participants, found that life cycle funds were the most rapidly adopted automatic plan feature during 2004, with approximately 1,200 employers going in that direction. Plan sponsor demands for its life cycle funds doubled between 2000 and 2003, with 75% of plans now offering at least one of the funds and 6%, or 632 plans, selecting a life cycle fund as their default investment option.

The company said 287 plan sponsors added Fidelity’s automatic (deferral) increase program with m ore than 1,800 plan participants opting for that choice, resulting in an average increase of 1.7 %.

“Employees who are pressed for time, or lack confidence in their ability to develop the right asset allocation, are increasingly gravitating towards automatic retirement products and services that take much of the guess work out of investing for retirement,” said Bill Carey, president, Fidelity Institutional Retirement Services Company, in the news release.

Also rapidly gaining traction are discretionary investment management services, which, in Fidelity’s case, manages more than $250 million in retirement assets according to the announcement.