New EBRI Study and Proprietary New York Life Data Agree: Auto-Enrollment is Working

WESTWOOD, Mass., March 25, 2013 /PRNewswire/ -- A recent Employee Benefit Research Institute (EBRI) study reveals that auto-enrollment is now broadly embraced by the American worker and is instrumental in successfully improving plan participation.

EBRI's 2013 Retirement Confidence Survey, co-sponsored by New York Life, found that the vast majority of American workers not enrolled in a defined contribution plan would welcome auto-enrollment. Only 11 percent of the survey respondents indicated they would opt out of a plan if auto-enrolled at a 3 percent contribution rate, and 16 percent of respondents stated they would opt out if auto-enrolled at 6 percent. In practice, New York Life has observed even lower opt-out rates for participants auto-enrolled into a 401(k) plan in 2012: 5 percent.

"A staggering number of American workers aren't saving for retirement, but the EBRI study shows they are open to new solutions.  Nine in ten employees not saving for retirement acknowledge that they would if their employer auto-enrolled them," said David Castellani, CEO of New York Life Retirement Plan Services.

"At New York Life we believe auto-enrollment is vital to improving the health of an organization's retirement plan," concluded Castellani.

Additionally, auto-enrollment does not need to be a singular event for a participant or plan. Employees that have stopped participating in their plan can be auto-enrolled again on an annual basis in a practice called an "auto-sweep."

Auto-sweeps prevent employees from disengaging from the retirement plan for the long term. Castellani noted that in 2012, 71 percent of participants who had previously opted out of their 401(k) plan stayed enrolled after being auto-swept back into the plan. Approximately 10 percent of the company's retirement plan clients employed an auto-sweep feature in 2012. 

New York Life is a sponsor of the EBRI survey, along with approximately 20 other retirement plan providers, asset managers, consultants, and companies. EBRI's survey was based on telephone interviews with more than 1,200 Americans over the age of 25.

About New York Life Retirement Plan Services
New York Life Retirement Plan Services offers bundled retirement plan solutions and defined contribution investment-only products throughout the United States. New York Life Retirement Plan Services, a division of New York Life Investment Management LLC, administers more than $42.2 billion in bundled retirement plans and $8.4 billion in defined contribution investment-only assets as of December 31, 2012. With offices in Westwood, Massachusetts, Parsippany, New Jersey, and San Francisco, New York Life Retirement Plan Services is widely recognized for its leadership within the retirement plan industry.

SOURCE New York Life Retirement Plan Services