Centurion is frequently asked to help plan sponsor clients increase retirement plan participation rates. We are very fortunate to work with plan sponsor clients who are genuinely interested in improving retirement outcomes for their employees.
So, what is the best way to increase participation in your retirement plan? Education helps. On-line tools help. Seminars, webinars…they all help
How about automatic enrollment? The Pension Protection Act of 2006 authorized employers to automatically enroll workers in their defined contribution plans. Eligible employees are “auto enrolled” at a given contribution rate, with the right to opt out of the arrangement at any time.
The statistics are undeniable: participation rates in plans which require voluntary enrollment average 57%. Participation rates in auto-enroll plans average 92%! Most employees don’t opt out!
As a real-world example; Centurion has a client who wanted to increase participation in their plan that, in 2014, had a 61% participation rate. We enhanced education with more frequent sessions and targeted messaging. Over a 24-month period, participation rose to 71%. They were pleased. Fast forward to 2018. Plan design changes brought on an automatic enrollment feature. EVERY employee was automatically re-enrolled into the plan at a 3% deferral rate. Today, the plan’s participation rate is holding at 96%! Employees don’t opt out!
This strategy is improving retirement outcomes in retirement plans in the United States and around the world. Plan sponsors have to continually evolve and refine their plans, encouraging positive behaviors with their participants and aligning plan design with their overall retirement benefits philosophy. This will provide better retirement outcomes.