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Retirement Made Simpler News
January 21, 2011
Each issue of Retirement Made Simpler News delivers important news, research, updates and more to your inbox. Meet the Organizations
In the News
A Regional Perspective—Automatic 401(k) Enrollment Becoming More Popular in Cincinnati
Just 51.6 percent of eligible workers in Cincinnati are enrolled in a 401(k) plan. A new tactic aims to raise that number. Increasingly, companies, including Chiquita Brands, are automatically enrolling new hires in 401(k) plans, rather than waiting for employees to sign up.
- Success Story: Chiquita Brands International switched to automatic enrollment in 2007, and has seen its participation rate climb from 75.4 percent in 2003 to 81.6 percent in 2008. The company automatically withdraws 2 percent of every eligible employee's pay for his or her 401(k) plan, and then matches that contribution with a 150 percent company contribution. A similar match is made for employee contributions up to 6 percent of pay.
Read the Cincinnati Enquirer Story
Read the Mandarin Oriental Success Story
South Dakota Auto-Enrollment Plan Moves Participation Northward
More evidence that automatic enrollment succeeds in raising participation rates comes in a new study on South Dakota's Supplemental Retirement Plan. The analysis found that among government units that adopted automatic enrollment, 91 percent of new eligible employees are participating in the SRP, compared to the 1 percent of new hires in units without automatic enrollment.
Read the Employee Benefit News article
Read the Study Read the Study
Webinar: Maximizing 401(k) Plans: What Automation, Education, and Advice Can Achieve for Participant Outcomes
Research shows that the vast majority of participants are not on track to meet their retirement needs. As an employer, is your plan taking the right steps to keep your diverse employee base on the right path? Industry experts will present recent research and discuss some of the steps that employers can take to assist participants.
Listen to the Webinar
Webinar Presentation
Research
Trends Swing Positive for Defined Contribution Plans
In a new survey by Callan Associates of 90 DC plans, 51.3 percent used auto enrollment, compared to 43.9 percent in 2009. Plans using auto escalation climbed to 46.2 percent from 33.8 percent. In addition, of the plan sponsors that reduced or eliminated company contributions to their plan during the past two years (nearly 20 percent):
- 58 percent intend to reinstate them over the next 12 months, and
- Nearly one-third had restored them partially or completely—with 75 percent of those reinstating company contributions at full prior levels.
Read the Press Release
Misbehavioral Finance?
Research in the past several years has illuminated how behavioral economics affects participants, but employers understand a lot less about how it has an impact on employers themselves. “Plan sponsors are very aware of the biases that affect individuals, but I do not think a lot of sponsors are aware of these biases” that can affect them, says Gary Mottola, Associate Director of Investor Education at the Financial Industry Regulatory Authority (FINRA), an RMS partner.
Read the Plan Sponsor article
Resources
Automatic 403(b) Toolkit
Automatic 401(k) Directory
Calculators on Retirement Made Simpler
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