Automatic Enrollment Myths Oct 16
After eight years of offering automatic enrollment to its clients, Bank of America Merrill Lynch notes that:
- Of employees who were placed into their employer’s plan via automatic enrollment, only 3.4% opted out in 2014.
- Fewer employees opt out of participating in their 401(k) plan when the default contribution rate is higher. In fact, as default rates rise, participation in the plan increases as well.
- More participants in automatically enrolled plans voluntarily increased their contribution rate year-over-year.
- Average contributions increase dramatically for participants who are automatically enrolled. Every year since 2009, contributions for automatically enrolled participants have increased, according to the report.