As 401(k) plan engagement continue to rise, so does participation among Millennials. The “Plan Wellness Scorecard,” a recent report by Bank of America Merrill Lynch, finds that among the 24% increase in employees that enrolled and contributed to their company’s retirement savings plan during the first half of 2016, Millennial participants (those aged 21 to 34) produced more contribution rates than any other age group.
The report highlights automated financial benefit plan features as key reasons for the upsurge, with 46% of new enrollments generated by simplified enrollment strategies, such as automatic enrollment or Express Enrollment. The study reports auto-enrollment has increased 33% since 2015, while Express Enrollment has risen 42%. Higher auto-enrollment default rates have also gained participants (up 41% since 2016), in addition to auto-increase (up 153% since 2012).
While included in the same generation, the report reveals unique and dissimilar savings behaviors among older (ages 28 to 34) and younger (ages 21 to 27) Millennials. For example, older Millennials are increasingly more likely to participate in their employer’s retirement savings plan than younger ones, at 60% versus 38%, respectively. Once a plan features auto-enrollment, however, participation in younger Millennials jumps to 78%, versus 88% of the age group’s older members.
“We’re continuing to see Millennials take control of their finances and be more proactive with retirement as they recognize the implications of living longer as well as the benefits of saving early,” says John Quinn, head of Institutional Product and Platform Management at Bank of America Merrill Lynch. “Having the right plan design features leveraged by engagement practices can shape employees’ long-term investment strategies, as well as improve participation among younger generations.”
In order to surge engagement and plan participation, the report encourages plan sponsors to adopt simpler processes including auto-enrollment and auto-default for all employees, not just limited to new hires; apply auto-increase features to help workers grow savings over time; and team with plan providers to offer a variety of resources to employees, such as offline and digital enrollment and account management tools. In fact, mobile features have helped drive engagement with Millennials, as over half (55%) of all mobile enrollments have been completed by participants between ages 21 to 34.
More information on the scorecard can be found here.