| | Benefits & Administration | | Retirement Program Designs of the Future: Beyond Automatic Plan Features | | As it became clear that defined contribution (DC) plan participants were struggling with savings and investing decisions, the use of automatic plan features, encouraged by the Pension Protection Act (PPA), became the new trend in helping participants reach their retirement goals. The 2017 PLANSPOSOR DC survey found that 42.7% of DC plans overall use automatic enrollment, and 35.4% use automatic deferral escalation. This increases to 65.6% and 67.3%, respectively, for the largest plans. In addition, many DC plans are defaulting participants into target-date funds (TDFs) as a set-it-and-forget-it investment strategy—letting professional managers take control of investment diversification decisions. However, as retirement plan sponsors focus on increasing retirement income replacement ratios for participants and new generations enter the workforce, they need to look at enhancing their retirement programs so participant retirement goals are met.Read more > | | Study Supports Use of Auto Features in Public-Sector 457 Plans | | A follow up to a study done in 2010 finds automatic enrollment and automatic escalation can help public-sector 457(b) plans increase participation and savings rates for employees. The new research from the Center for State and Local Government Excellence shows that the proportion of workers contributing to the SRP among those automatically enrolled declines with additional years of employment; however, it is still significantly higher than for workers in agencies that did not adopt the auto enrollment policy. The study also found of the new hires in 2015 who have automatic escalation, 95.2% kept making a contribution in 2016.Read more > |
|
| |
