Staying Power Among the Automatically Enrolled, Research Says

By John Iekel • August 24, 2018 • 0 Comments
Automatic enrollment has long been touted as an effective means to increase participation in retirement plans. And a recent study has found strong retention among employees added to plan rolls automatically.

In a recent study, the Pew Charitable Trusts found that overall retention rates among those who are automatically enrolled are high. And that result holds even given a wide range of employee/participant priorities and concerns.

The simple presence of automatic enrollment spells participation for 85% of those who would sign up for a plan if one were available but automatic enrollment was not in place; just 15% of them opted out, Pew found. And more than half — 55% — of those who would not have signed up for a plan of their own volition opted to stay in once they were automatically enrolled.

Staying in the plan once automatically enrolled is more likely among new participants who said that certain things would have to happen before they would enroll on their own initiative. These include:

Likelihood of Staying in Plan if Auto Enrolled, Given Certain Priorities

Most Important Change that Would Have 
To Occur Before Independent Enrollment
     Stay in if Auto Enrolled   
Employer contribution or match                     93%
Getting closer to retirement                     93%
Receiving tax benefits                      88%
Paid down debt                      86%
Promotion or raise                     80%
Confidence in investments                      77%

And automatic enrollment, at least in state auto-IRAs, also overcomes reluctance, Pew found:

Likelihood of Staying in State Auto-IRA Plan if Auto Enrolled, Despite Certain Obstacles

Obstacle to Retirement Saving       Stay in if Auto Enrolled in State IRA Plan  
Saving for education                                  94%
Paying for Immediate Major Expenses                                  86% 
Paying off debt                                  79%
Not willing to sacrifice living standard                                   69%