Most CEOs On the Fence about Automatic Enrollment

March 8, 2007 ( - Only 5% of firms intend to use the automatic enrollment feature sanctioned by the PPA to get employees to contribute to a 401(k) account, according to a recent survey of "Trendsetter" firms by PricewaterhouseCoopers' Private Company Services.

The survey of executives at the 128 companies included in the PricewaterhouseCoopers’ Trendsetter Barometer – which tracks the business issues and best practices of privately-held companies identified in the media as the fastest-growing U.S. businesses – found that most companies (65%) were uncertain whether they would use the automatic enrollment feature and 16% said they did not intend to.

Twenty-seven percent of CEOs say they are knowledgeable about the PPA ( Everything You Wanted to Know About the PPA ). However most (61%) admitted they are not knowledgeable at all.

In terms of hiring and retention, CEOs of 15% of the companies believe that the PPA will make their efforts more competitive. Two percent disagree, while 23% believe it will remain about the same; 21% were not certain and 39% were not reported.

Guiding Investment Options and Policies

Eighty-seven percent of companies currently offering a 401(k) or self-directed profit sharing plan offer, on average, 5.8 of the nine asset classes studied by the Barometer, with the top five most often offered options being large cap funds (88%), small cap funds (85%), international funds in developed countries (80%), money market funds (78%) and index funds (69%). Lifestyle funds are offered by 40%.

“The percentage of companies offering Lifecycle target maturity funds has been increasing and will likely continue to increase,” said Paul Bracaglia, investment advisory partner with PricewaterhouseCoopers’ Private Company Services, in a press release. “Lifecycle funds offer participants in one fund the opportunity to participate in a broadly diversified portfolio that evolves over time as the participant ages.”

The data also shows that firms using an independent investment adviser (80%) to help them manage their plan and their fiduciary responsibilities are more likely to offer more asset classes on average – 6.1 of 9 versus only 4.4 of 9 in firms without an adviser.

Fifty-nine percent of companies say they have a formal investment policy statement for there 401(k) or self-directed plan, leaving 19% who do not, and 18% who don’t know if they have a formal statement. Most companies (54%) review the investment options in their plans on a yearly basis; however, 26% do so quarterly and 13% do so semi-annually.

For the full results go here .