Bringing Retirement Made Simpler to a Close
This website will go offline February 1, 2016.
As 2015 comes to a close, Retirement Made Simpler News and its website www.RetirementMadeSimpler.org are bringing down the curtain on almost a decade of developing research, providing innovative tools and keeping benefits and human resource professionals informed about automatic retirement plans.
Our campaign began in 2006, when three organizations—AARP, FINRA and the Retirement Security Project—collaborated on a big idea: Develop a campaign to realize greater retirement savings among working Americans by helping employers adopt automatic retirement plan features designed to effortlessly increase the savings of their employees. In the years that followed, RMS made significant contributions to the automatic landscape.
- In 2007, a ground-breaking RMS study of employer-sponsored retirement plans shows that employees were nearly unanimous in their support of being automatically enrolled in their companies’ 401(k) plans. Conducted by Harris Interactive® on behalf of the Retirement Made Simpler coalition, the study found that 98 percent of U.S. adults currently enrolled in an automatic 401(k) plan agree they are glad their companies offer this savings vehicle, with nearly four in five (79 percent) of them expressing strong agreement. “This was very valuable research at the time,” notes Gerri Walsh, FINRA’s Senior Vice President of Investor Education. “Many employers had been concerned that employees would not like automatic 401(k)s—hence they reported being reluctant to adopt them. The RMS survey overwhelmingly dispelled that myth, making automatic 401(k) adoption a win-win for employers and employees.”
- The RMS website established itself as the most comprehensive source of automatic retirement plan information on the web. Resources included Automatic 401(k) and 403(b) Toolkits, an Automatic Impact Calculator to help companies calculate the impact of automatic enrollment on participation and deferral rates, and a wealth of academic and industry research and white papers on automatic retirement issues.
- One of RMS’s most popular resources was The Business Case for 401(k) Automatic Enrollment, by David C. John, Retirement Made Simpler Policy Advisor and also Senior Strategic Policy Advisor at the AARP Public Policy Institute and Deputy Director of the Retirement Security Project. Among other reasons to consider automatic plans, John noted that “studies show that automatic enrollment can dramatically increase participation by the four groups—women, minorities, younger workers and moderate-income employees—most likely to under-save.”
From the beginning, RMS and its partners were strong proponents not just of automatic enrollment, but best practices in automatic plan design. Those practices included a default contribution that started at 6 percent or higher, yearly automatic enrollment of all employees and automatic escalation and rebalancing.
The good news is that more and more companies are not just adopting automatic enrollment, but making use of an array of auto features to help employees effectively save for retirement. Not only have more than half of America’s largest companies embraced automatic enrollment, but:
- Among Vanguard plans with automatic enrollment, 15 percent set their auto-enrollment rate at 6 percent or more in 2014, up from just 5 percent in 2005.
- In addition, seven in 10 of the plans that automatically enroll employees now also automatically increase their savings rate over time.
Great strides have been made to help Americans save through the simple mechanism of automatic defaults—and more strides will surely be made in the years to come.
RMS and its partners are proud to have contributed to helping employers understand and adopt automatic retirement plan features. AARP, FINRA and the Retirement Security Project will continue our respective efforts to build America’s retirement security.
Thanks to all who have contributed to, and supported, our newsletter and the many RMS initiatives over the years. Together we helped change the retirement landscape.