A Principal news release said the new form helps reduce plan sponsors’ administrative and fiduciary concerns in connection with auto enrollment programs.
Principal said the form has a three-step checklist helping employees to:
- decide how much to save. This option, called “Smart Start,” allows employees to choose the salary deferral rate set by their employer. The average Smart Start deferral is 5%.
- decide on automatic savings hikes. Principal Step Ahead allows employees to automatically increase their salary deferral rates each year.
- choose investment options. Employees can choose to allocate their investment options themselves or can opt for “do-it-for-me” investment options.
“Eighty percent of today’s workers nearing retirement admit they don’t feel confident they’ll have enough money to live comfortably in their golden years. Why? Because they either aren’t participating in their employer’s retirement plan at all or they simply aren’t saving enough,” said Monica Kirgan, vice president of The Principal’s Retirement & Investor Services, in the news release. “The culprit, we think, is not a lack of information, but too much information about too many significant decisions. Employees often become so confused that they do nothing.”
With the new product, Principal said that employees have the option of enrolling online, on paper or by phone.
According to the Principal news release, the Enrollment Suite has resulted in:
- a 5.34% higher participation rate than the standard enrollment form.
- an average Smart Start deferral of 5%, significantly higher than the average 3% deferral without Smart Start.
- an average Principal Step Ahead Option deferral increase of 1.4% per year for an average of five years.